LLU inertia impacts mass-market broadband – BT

19 Jul 2005

Contributing to a growing debate surrounding concerns that the early adopter phase broadband take-up in Ireland is slowing down, the chief operating officer of BT Ireland has blamed local loop unbundling (LLU) inertia for the lack of compelling products to excite consumer interest and called for tougher regulation of the telecoms sector.

In an interview with siliconrepublic.com Mike Maloney said the Commission for Communications Regulation (ComReg) needs “more teeth” to ensure operators comply with its directives instead of tying up progress in long drawn out court battles.

At present both ComReg and Eircom are entwined in a long-running court battle over Eircom’s alleged foot dragging in allowing other operators to access local loop around the country. It has been claimed there are less than 3,000 copper lines unbundled in Ireland, less than 0.5pc and amongst the lowest in the EU.

Maloney said at present BT Ireland has access to 40 local loops, with plans to add another 13 over the coming year, which will give the company access to 52pc of the Irish population. He revealed last week the company is planning to invest €200m in broadband in Ireland over the next three years and will use the same ADSL technology that BT has used in the UK to boost the range of broadband access from the local loop to beyond 6km — basically adding 33pc coverage within an average local loop.

“The real question, however, is how do we get to 100pc broadband coverage in Ireland?” This whole question, he said, pivots on overcoming “LLU inertia” because unless that happens broadband service providers cannot offer the range of services and products that will attract Irish consumers.

“The ongoing LLU issue is slowing everybody down, the whole industry knows this. This is the major problem.

“140,000 people have signed up for broadband in this country. The early adopters have moved and therefore the most pressing problem facing the industry and the economy as a whole is how do we get this to a mass-market stage? Proper LLU would help create multiple price points and tailored products to suit a homogeneous, multi-faceted consumer market and that would bring about a mass market.”

Maloney elaborated: “Only 42pc of the Irish population have PCs. But what about the kids using gaming consoles? They just want a broadband connection to do online gaming. Now there’s a segment of the market that’s not prepared to pay €30 a month for a broadband connection but would rather pay €5.99 a month.

“These are the things that would happen once there’s more competition in the marketplace. Full and proper LLU will create more features and price points to allow penetration into different segments. This is what will create a mass market for broadband,” Maloney argued. “This is a market with plenty of opportunity for every business to succeed as long as we introduce competition and give fair access to all players in the marketplace.”

For this to happen, Maloney argued, ComReg needs more power to regulate. Under the original Communications Bill 2001, ComReg should have had powers to fine a licensed operator up to 10pc of its annual turnover if it failed to comply. However, this failed to come to pass in subsequent legislation and the maximum fine for breaches of regulations is currently €3,000. Eircom, Vodafone and O2 are currently among the companies challenging ComReg’s decisions on market dominance.

It is understood the Electronic Communications (Miscellaneous Provisions) Bill, which will be published later this year, will give ComReg back its original power to fine companies up to 10pc of turnover.

“The regulator is actually doing a fantastic job if you look at the progress that we’ve made here relative to how long it took for things to happen in other countries. We have one of the most progressive regulators, but it doesn’t have enough teeth to enforce decisions.

“It’s a classical Irish situation, it’s all caught up in legalities, appeals and the whole process is moribund now and the Government needs to make sure that ComReg has the right powers to force Eircom to the table to provide equal access for everybody on a fair basis. When that happens, the market will innovate.”

By John Kennedy