PC penetration not sole cause of broadband woes

22 Aug 2005

Blaming Ireland’s low PC penetration for the nation’s equally poor broadband penetration is only serving to distract from the bigger issues of high prices, poor competition and poor availability, the chairman of telecoms group ALTO has told siliconrepublic.com. He also pointed to European research that confirmed Ireland is below the European average at only 3.8pc population penetration for broadband.

ALTO chairman Tom Hickey pointed to research unveiled in recent weeks by the Commission for Communications Regulation (ComReg) that found some 23pc of home internet subscribers use a broadband product. The research also found that some 61pc of Irish internet users access the internet by dial-up and 10pc by ISDN with the remainder accessing the internet by other means such as wireless.

In recent months senior telecom figures have pointed to Ireland’s low PC penetration of 42pc of the population as a reason for why only 140,000 people have signed up for broadband connections to date.

“Effectively what ComReg is telling us is 77pc of the online population has yet to sign up for broadband. That means that there’s a lot of people with PCs so claiming a lack of PCs does not explain why Ireland is so far behind on broadband,” Hickey said.

“Price, demand, competition and availability are the real reasons. Competition is key to it all. Where you’ve got competition you’re going to have price competition. The other key is availability. The LLU process looks like it will be delayed for a long time.

“The simple truth is that where you’ve got a vibrant, competitive market you will have demand being stimulated,” Hickey said.

Hickey pointed to research revealed in July by the European Competitive Telecommunications Association (ECTA) that showed Ireland had a broadband penetration rate of 3.8pc, far behind the European average of 10pc. The Netherlands scored the highest with a penetration level of 22.1pc, followed by Denmark with 17.9pc and Belgium with 16.7pc. Our nearest neighbours, the UK, was also above the European average with a rate of 12.2pc population penetration for broadband.

Another factor of the ECTA research pointed to by Hickey was the fact that all across Europe the majority of people who access broadband do not do so through an incumbent. “This is not the case in Ireland whereby Eircom provides over 80pc of the broadband in the country.”

According to ECTA, all across Europe challengers have been outperforming incumbents for several quarters as consumers have welcomed and responded to increased choice. The key growth has been in the DSL area. ECTA pointed to a situation in Germany whereby four years after the adoption of LLU regulation, line sharing has still not taken off. Bitstream products are also missing and cable is a small player.

Roger Wilson, managing director of ECTA explained poor competition is already translating into lower levels of demand for broadband, which Hickey claims is happening in Ireland.

Wilson commented on the German issue: “Although the absence of line sharing in Germany is a top concern for ECTA members, the real tragedy is for consumers in the EU’s largest member state as they simply are not enjoying the full benefits that effective competition would bring. This is also translating into lower levels of demand for broadband as well. France has already overtaken Germany, and if present trends continue, the UK will soon take second place.”

Hickey commented on the ECTA findings: “Competition in Ireland is not nearly as intense as it would be in Europe. We are still the most expensive line rental country in Europe. And following the court case between Eircom and ComReg, the LLU process will be delayed for a long time. It now looks like December before we will witness an outcome from the Electronic Appeals Panel.”

Speaking of the Electronic Appeals Panel, which has yet to even rule on the mobile virtual network operator issue, Hickey called on the Minister for Communications, Marine and Natural Resources to speed up the appeals process.

“We need the minister to refer appeals quickly. As far as I know the LLU issue has not yet even been referred to the Appeals Panel.

“We need to pave the way for immediate referrals and we need an Appeals Panel to work quickly, otherwise we are looking at a bottleneck.

“The Electronic Appeals Panel was supposed to be a quick and cost effective method to resolving issues in the telecoms market without going down the long route of the High Court, and if we can’t do that then it becomes a block rather than a facilitator for regulatory decision making,” Hickey warned.

By John Kennedy