Urgent fibre strategy needed to accelerate Ireland’s recovery

22 May 2009

In a day where Microsoft founder Bill Gates predicted that, in the US, economic recovery will be enabled by technology, the head of Ireland’s telecoms industry group warned that Ireland’s economic recovery will rely on the urgent construction of next-generation networks (NGNs).

“The economy has been on a very rapid downward trajectory, with significant contraction in economic activity, rapid increase in unemployment and a shrinking pool of revenues available to the industry,” Telecoms and Internet Federation (TIF) chairman Gerry Fahy said at tonight’s annual TIF Ball in Dublin.

“Our own industry has been no stranger to job losses and headcount reduction, with close to 1,500 job reductions announced to take effect over the coming months. Thankfully, our industry has maintained its capacity to invest, and while there has been a reduction in overall investment, this is more driven by the dis-improvement in the business climate than on any reluctance to maintain the pace of investment in new technologies.”

According to TIF, electronic communications network and service revenues in Ireland were worth €4.4bn in 2008, with around 62 telecoms operators currently active in the Irish market.

However, while Irish providers invested in the order of €730m last year in developing their networks, the figure will be less this year. On the plus side, the number of broadband customers nationwide has risen to over 1.2 million and Ireland is now in the top 10 of EU countries for broadand.

“Real progress has been made and we must make every endeavour to sustain it,”
Fahy said, noting that some significant milestones have been achieved, including the conclusion of the Broadband to Schools Programme, which, with the support of the industry, delivered broadband to all 5,000 primary, secondary and vocational schools to the tune of €5m per annum over the past three years.

“In addition, the awarding of the rural Broadband Scheme, which had been urged and promoted by the industry, will bring the availability of broadband to 100pc of homes over the next few years. So much has been achieved to the credit of the industry and policy-makers.”

Fahy said that business customers of Irish-based telcos are suffering from the economic downturn and are being much more cautious about all their expenditure categories.

“However, our own industry is perhaps slightly more resilient than other less essential services,” he explained.

The rollout of digital terrestrial television (DTT) remains a challenge for both Government and industry. Fahy said. “The switch-off of analogue TV is planned for 2012 and this also raises questions of how best Ireland can use the freed-up spectrum arising as result of this switch-off. Indeed, interesting times lie ahead in this space.”

Fahy warned that despite the recession, the amount of data in the world is exploding, and the industry needs to invest in next-generation technology to provide the data highways of the future.

“The problem, of course, is that these highways are expensive and risky, the payback long and uncertain, and the technological and competitive landscape difficult to predict. In the current environment, with a relatively downbeat economic outlook, it is difficult to foresee who has the balance sheet and the risk appetite to undertake such investment in this basic, but very necessary, infrastructure.

“All operators face the same challenge and perhaps the timing may be ripe to reach for a new approach, a new model of competition. In previous times, it was feasible for regulators to insist on platform-based competition as the foundation for a competitive market, but it may be that the old model no longer applies in this drastically different environment, and a process of co-opetition may be more feasible where the backbone infrastructure is provided in a collaborative fashion at a wholesale level, while competition proceeds at the retail level.

“We must all be prepared to explore any model that might provide a solution to the infrastructure deficit which will hold back, not just the industry, but the economy as a whole, and will slow the pace of recovery and inhibit the ability of the economy to exploit the opportunities of the information economy of the 21st century.

“TIF is willing to play its part in this regard and is currently commissioning a study into the scale of the problem and the possible solutions, which we will then take forward as a template with which to engage policy-makers and regulators,” Fahy told the telecoms industry.

By John Kennedy

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