Minister predicts less
market regulation

6 Oct 2005

Investment is needed in both access capacity beyond broadband and in next-generation network architectures if Ireland is to remain competitive, Minister for Communications, Marine and Natural Resources Noel Dempsey TD told a CEO forum organised by the Commission for Communications Regulation.

Dempsey said the advent of next-generation network services, such as voice over internet protocol (VoIP) products such as Skype and Vonage, and convergence between fixed and mobile will result in increased competition in the Irish marketplace and could reduce barriers to entry for new operators. This in turn, he predicted, could see a lessening need for market regulation.

“We are currently entering a period of significant change in the telecoms sector; new technologies are emerging at an increasingly rapid pace that are likely to change the shape of the industry in the most fundamental ways,” Dempsey told the assembly of senior executives in Ireland’s telecoms industry, which included Eircom CEO Dr Philip Nolan and Vodafone Ireland chief executive Teresa Elder.

“Investment is needed in both access capacity, beyond what is considered broadband today, and in next-generation network architectures if consumers and service providers are to benefit from the potential of next-generation networks and if Ireland is to remain competitive. There are some indications that this investment is beginning in Ireland.”

Dempsey continued: “Convergence is likely to occur between different aspects of the telecoms sector including technologies, services and markets. Nomadic wireless technologies such as WiMax are likely to play an important role in fixed-mobile convergence. Developments in the area of radio spectrum management could impact on this.”

He argued that increased competition at various levels of the Irish telecoms sector is likely to emerge as next-generation networks are adopted that could reduce barriers to some forms of market entry. “This may result in an opportunity for some regulation to be withdrawn or lessened. On the other hand, more radical measures may be needed to increase competition to enable more operators to be more innovative in terms of quality, service and price in the interests of the Irish consumer. As next-generation networks emerge they could also create the potential for new barriers to entry or bottlenecks to emerge. This is likely to require regulatory attention.”

At the forum, Elder put forward her vision of the kind of regulation required as new markets and next-generation networks evolve.

“We are poised to deliver on our vision of the future network market, including IP — we are investing between €3m and €4m a week in upgrading our network — but to continue this investment we need to make sure that we have environment that encourages innovation and that means less unnecessary regulatory intervention.

“This should be a dynamic market driven by customer demands and customer solutions — not by regulation. In the future market, regulation should focus on facilitating market dynamics,” Elder said.

Nolan said Eircom is facing increasing competition from overseas telecoms giants operating in the Irish market, yet faces overwhelming levels of regulation. “Not many appreciate the cast list of major global investors in Irish telecoms today. Vodafone is enormous, Hutchison is enormous, BT is a €40bn company, O2 is a €20bn company, Sky is huge and Liberty Media is consolidating the cable market. In terms of valuation Eircom is at the bottom, we are not a huge global player. We need to make returns here. We are an Irish company. Unfortunately we have 99pc of regulation yet our network is open for all of these companies to take advantage of.”

On 24 October, Eircom is due to issue ComReg and the telecoms industry with its market requirement determination, which arose from a settlement with the regulator after Eircom’s victory in the High Court over local loop unbundling.

By John Kennedy