Report slams Ireland’s broadband prices

21 Mar 2005

Ireland has emerged as the 27th most expensive country in the world for basic broadband access and it has been surpassed by countries where it had been compared unfavourably with in the past, such as Greece and Italy.

According to a top 30 listing compiled by lobby group IrelandOffline of locations in the world with the cheapest basic broadband packages based on OECD figures, Korea topped the list for a basic package of 2.5Mbps for only €13 a month, followed by France with 8Mbps broadband for only €14.90 a month and the Netherlands with 768Kbps broadband for €19.95 a month.

Our nearest neighbour, the UK, emerged in sixth place globally with a basic broadband package of 512Kbps for €26.99 a month.

Ireland with a total basic broadband package from Eircom currently at 512Kbps costing €39.98 (including line rental) came in behind Spain, Belgium, Portugal, Austria, Mexico, Greece, the US, Poland and Italy in terms of broadband prices.

IrelandOffline said the high price of basic broadband packages in Ireland were being driven by the high cost of line rental at €24. “It’s more than €8 above the EU average. Factoring that in, it probably makes Ireland the most expensive if you get broadband over a phone line, which is what 95pc of broadband customers do get in Ireland,” said the lobby group’s spokesman Damian Mulley.

Mulley said lack of competition was the main reason for why broadband in Ireland is amongst the highest worldwide. Mulley also argued that Eircom’s decision to double its bitstream access speeds from 512Kbps to 1Mbps does not resolve the problem. “Eircom’s latest announcement will not lift Ireland’s position in the rankings. Speed is not the most important factor, value for money is. Unless price comes down along with speeds going up, Ireland could in fact slip the small few places to bottom of the OECD table. The trend for the OECD is speed increases every six to 12 months and price decreases.

“With prices across the OECD heading to €30 or less per month, Ireland needs to have a large price drop to even retain its current miserable position,” he argued.

Mulley said that if the wholesale bitstream price was reduced and if local loop unbundling (LLU) crisis was resolved satisfactorily then Ireland would see more companies offering more varied products with better value.

“Bitstream is what the majority of broadband products are based on. Eircom’s wholesale ADSL product is resold by Esat BT, UTV Internet, Netsource and The retail/wholesale margin is 33pc compared with 50pc in the UK and is so low that to make a profit the resellers can’t drop the price too much below what Eircom sells it at. The table shows that a significant number of broadband packages in the OECD are €30 or under.”

Mulley argued LLU is still the key for real competition. “Esat BT tried LLU but only managed to unbundle 2,300 lines out of the 1.7 million in the country. The cost of unbundling and the procedures meant it was too expensive and took too long. Smart Telecom and Leap Broadband are now getting into unbundling and again the process is over-complicated. To combat this the Commission for Communications Regulation [ComReg] brought out new directives to automate the LLU process. Eircom reacted by going to the High Court.

“Until the High Court case on April 13th between Eircom and ComReg, we are in a state of limbo. The directives from ComReg would help to automate the LLU process. Currently the LLU process is manual and Esat BT only managed to transfer more than 2,300 lines at great expense. Smart Telecom wants to roll out on a massive scale but it too is relying on LLU and unless the process is automated it could take them a long time to connect up the 100,000-plus customers they are seeking to sign up.

“Eircom upped its speeds on its basic package to 1Mbps. All it did was double the download speed. Upload (128Kbps) was not doubled that would have been a proper speed increase. Upload speed is becoming as important these days as we use our computers more and more,” Mulley warned.

On the question of the impact automation of the LLU could make on broadband, Mulley cited Italy, which a few years ago had similar broadband problems to Ireland. “Since the introduction of automation LLU has been a resounding success in Italy and at least one million lines have been unbundled and people can access services of up to 8Mbps.

“All across Europe 8Mbps broadband is becoming standard. Ireland may be approaching 2Mbps but we need more competition,” Mulley said.

He predicted that if Smart Telecom’s 2Mbps for €35 a month with line rental for the first 100,000 people free succeeds in becoming a reality it could force other operators to drop their prices, thereby sparking a broadband price war.

By John Kennedy