Wires no longer crossed on telecoms competition

21 Apr 2008

The Irish Government has finally opened up to buying communications services from alternative operators.

Even in times of downturn, one business segment is always active and that’s the public sector.

This is why companies in the IT sector have always been keen to foster relations with government in a bid to have at least one area of the business that would guarantee some kind of regular cash flow.

Getting into government to supply certain services can also prove tricky, especially in the communication infrastructure end of things. Eircom, of course, dominated proceedings there as the incumbent, and it’s only in the past few years that its dominance in the government space has been lessened by other competitors.

The same in the mobile voice and data space, where Vodafone was seen as the dominant force. Now, things are changing there as well.

Ronan Kelly, technical operations director for Smart Telecom, says it has enjoyed quite a high success rate in its tenders for government contracts.

Kelly says one of the big challenges Smart, and other operators, faces is the ability to grow the network and to increase its reach, so it can apply for more of the tenders.

He says tenders are on the increase due to decentralisation and many of them are geographically dispersed and very often in areas where Smart’s network doesn’t reach. “From time to time, we’ll choose not to tender, based on that fact because the cost of delivering service would be too high.”

With this in mind, Smart has been focusing on expanding its network reach. Currently the company has 37 Eircom exchanges unbundled and
it also recently received approval to get the copper loop frequency management plan updated — this plan dictates

the technology a company is allowed run over the copper pair. “We deployed a new standard called e.SHDSL — a new enhanced SDSL standard delivering 5MB per pair up and down. You can bond up to eight pair together. So, from the 37 exchanges I have 500,000 lines that I could potentially deliver a 40MB symmetric service to government agencies on a private network.”

The most recent development for Smart has been its purchase of radio spectrum frequency which will, the company claims, allow for a reduced cost, licenced radio solution in all the main population centres in the country and allow for rapid deployment. Smart also said install costs will be a fraction of what fibre costs.

According to Kelly, breaking into the public sector has been an important part of the company’s “story going forward”.

“Our sales into government is a significant endorsement of what we’re trying to do. We’ve seen prices drop in the regions with all the main players and that’s as a result of competition. So it’s key the government supports the operators on the MANs and bringing competition in.”

Damien Gallagher, 3’s head of business and new initiatives, says it had launched its business product set late last year to allow the company to offer broadband services to government. Therefore, 3 can now tender for any broadband contracts and provide broadband routers and USB modems to any department.

“Now that we’re in the business space, we can go after these contracts. We’ve moved up another level and will be targeting government bodies for different solutions,” says Kelly.

According to Gallagher, 3 has had no problem shifting its perceived image as a consumer company to that of a business one. He points to O2 and Vodafone, which have large numbers of consumer customers and are very consumer oriented, yet portray a business customer image.

“We have the coverage and we have the product for businesses and the public sector. So this is a good opportunity for 3 to go in there with innovative products such as Skype, which is offered on business handsets as well. And with more companies putting in additional IP connections … if you have Skype on your mobile you can reduce your costs.”

Gallagher says 3 is in a position to offer public sector agencies 30-40pc saving versus its competitors. “In the next few months, we will be very government focused, starting with county councils upwards.”

Billy D’Arcy, head of corporate and business sales at O2, says the recent government framework agreement means that government agencies will, from now on, be able to tender their mobility requirements for both voice and data. D’Arcy says in the past that business had gone to Vodafone because it was effectively the incumbent provider.

He believes this is a fantastic opportunity for O2. While it does have some government business, it is hungry for more and it expects, over the course of the next 24 months, that government agencies and public sector bodies will go to tender and O2 will win business for voice and data services.

D’Arcy says O2 was also seeing interest and “remarkable take-up” in the mobile broadband space. He added that O2 expects to double its market share in the government space and anticipates one in every two tender bids to be victorious. “We have been immensely successful on the corporate side of our business and will definitely work to grow the market share on the government side.”

By Eamon McGrane