Radical change in broadband policy needed, says CCI

7 Dec 2004

A radical change in the regulatory policy for Eircom has been called for by the Chambers of Commerce of Ireland (CCI), following last week’s Forfás survey on Ireland’s broadband connectivity. Among changes proposed by the Chambers are a ‘return on assets’ model to encourage Eircom to make investments in infrastructure as well as ‘free of charge’ access to the Government’s metropolitan area networks (MANs) for a limited period.

“Being third last in any list of international benchmarks, as we currently are for overall broadband take-up, is not where we need to be as country if we are to be competitive,” commented the CCI’s head of public affairs, Sean Murphy.

“Small and medium-sized enterprises (SMEs) account for over 90pc of businesses in Ireland yet at present only 30pc of SMEs in the country have a broadband connection. This is not acceptable. Given this feeble rate of broadband adoption (at just over 2pc of the population), radical actions need to be taken if we as a society and an economy are to catch up with and surpass our international competitors for the availability of this vital piece of infrastructure,” he said.

Among the proposals put forward by the CCI was the ‘return on assets’ model currently applied to ESB Networks in order to regulate Eircom’s broadband investment. “Under this model,” Murphy said, “the network investor gets a guaranteed low regulated return on assets commensurate with risk. At present, Eircom does not receive such a return; thus it has no business case for making this investment. This change would radically alter the model for broadband rollout. Eircom would be guaranteed a return on investment in its copperwire network and Ireland would gain a globally competitive advantage in broadband connectivity rates.”

Murphy predicted that in return for making this regulatory change, Eircom would reciprocate by driving down local loop unbundling charges, which are currently a drag on broadband connectivity.

Murphy also proposed investigating the benefits of enabling commercial operators to access the existing MANs free of charge for a limited period of time. “This action would further incentivise all commercial operators to develop a commercially viable business case for investment in and rollout of broadband in the areas surrounding the MANs. This option could only be made subject to connection between the operator and the supplier being retained in open ownership.”

Murphy concluded: “While we applaud the Department of Communications, Marine and Natural Resources for innovative investments in MANs and the advanced undersea cable system linking Ireland to the US, a vital piece in the jigsaw is still missing in linking business users to these gleaming new communications networks – this suggested regulatory change may well resolve this issue.”

By John Kennedy