Spectrum and certainty will drive NGN investment

2 Jul 2010

Market forces and competition rather than State investment should be the primary drivers for building next-generation networks, ComReg said in its strategic vision for 2012. Freeing up radio spectrum, it said, will be key.

In its strategy statement, ComReg said that telecoms companies have been calling for regulatory certainty before they are willing to invest in next-generation access.

Research commissioned by the Telecommunications and Internet Federation (TIF) and conducted by Analysys Mason puts the cost of such investment at €2.5bn – at a time that telecoms companies are fighting the recession and the State’s coffers are empty.

Job creation and next-generation broadband

However, investing in the next-generation of broadband will be the lynch pin for job creation across a plethora of industries in the decade ahead. As the latest Exchequer figures show, Ireland’s return to growth from recession is being driven by exports from multinationals who will require high-speed communications to conduct their business.

Indigenous recovery will require SMEs being capable of trading globally. By 2020, it is predicted that 70pc of Ireland’s exports will be services based. Without high-speed broadband access right across the country, that will be just a pipe dream.

As Communications Minister Eamon Ryan pointed out, €1.5bn has been invested in telecoms infrastructure in the last three years. But it’s the next three years that are going to decide if Ireland is going to be a relevant powerbroker in the digital economy. The regulatory mistakes of the last 10 years cannot be repeated in the next decade.

ComReg said it has listened to the concerns of telecoms operators who have called for regulatory certainty.

“ComReg acknowledges the relationship between NGA investment and innovation, and recognises the part that it could play in supporting Ireland’s economic recovery. The tools available to ComReg to foster the development of competition, innovation and investment stem from the legal framework within which ComReg operates. One such tool is ComReg’s role to manage and allocate radio spectrum,” the company said in response to industry concerns.

It said that market forces, and in particular cross platform competition and emerging consumer demand for high-speed broadband will ultimately drive such investment.

“ComReg, like the European Commission, continues to believe that the ladder of investment is pertinent to competition. Future networks are evolving within the industry, and the most efficient form of investment is driven by the private sector, particularly where competition is present.

“As has been seen in other countries, the presence of alternative NGA infrastructure platforms can be an important driver for the development of competing next-generation broadband platforms.

“The upgrading of cable TV infrastructure to support NGA broadband in certain parts of Ireland is likely to act as a stimulus for further fibre investments by the incumbent or alternative operators. Furthermore, wireless investment and the eventual development of network capabilities will likely play an important role in serving particular market segments and in further augmenting the competitive tension,” ComReg said.

What will drive broadband delivery in Ireland

It made it clear that public investment is not going to be the primary driver of broadband delivery in Ireland.

“ComReg recognises the role that public policy can play in driving the availability of broadband, but considers that market forces and competition should, in the first instance, be the primary driver of investment in NGA networks.

“Public investment, in any member State, would need careful consideration in order to avoid uncertainty amongst those operators already investing or contemplating investing in NGA networks and the need to minimise the potential for market distortions.”

Commenting on the strategy statement, the chairman of ComReg Alex Chisholm said: “It is clear that the electronic communications sector is experiencing unprecedented change, and has now reached a critical juncture in its development, particularly with the advent of fixed and wireless next-generation networks.

“There is evidence of significant and increasing demand for bandwidth to support an ever-widening range of electronic communications services. However, this is coming at a time when operators are facing falling profitability and substantial infrastructure upgrade costs.

“There are also important changes in the policy and legal environment, at both national and European levels, with the revised European Regulatory Framework due to be transposed into Irish law by May 2011. Communications regulation in Ireland must evolve to reflect this new environment if we are to continue to shape a competitive, innovative and consumer-friendly market.

“One important way in which we can promote further investment and innovation in the market is to provide a high degree of regulatory certainty,” Chisholm said.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years