500,000 broadband target may not be reached – Esat BT boss


10 Feb 2005

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The Government’s target of 500,000 broadband connections countrywide by 2006 may not be reached due to the ongoing difficulties surrounding local loop unbundling (LLU), said Esat BT chief executive Bill Murphy, who called on the Communications Minister and the Commission for Communications Regulation (ComReg) to fight for change.

Murphy was speaking at a press conference outlining Esat BT’s performance in the nine months to December 31 last. Esat BT’s revenues are growing 29pc year-on-year to €268m and EBITDA (earnings before interest, taxes, depreciation and amortisation) increased to €24m. Results for the quarter showed significant growth with revenues growing 37pc year on year to €96m and EBITDA up to €12m.

Murphy warned that broadband take-up rates are beginning to slow due to uncompetitive offerings in the marketplace. He said that due to the current impasse over LLU, his company is not in a position to offer DSL sevices countrywide. “If we had full LLU in Ireland we could possibly be signing up 5,000 orders a week for broadband.”

Last week it emerged that ComReg has threatened Eircom with possible legal action if the telco does not comply with a directive to report on the issue of LLU, a process seen as essential to the roll out of broadband in Ireland.

He said that Communications Minister Noel Dempsey’s target of 500,000 broadband lines by 2006 was unattainable at the present rate of progress. “We are not on path to reach 500,000 and ComReg needs to do much more,” Murphy said, reminding both ComReg and Eircom that when it happens change is good for the market. “Last year we had only 5,000 broadband customers. As of 31 December, we had 30,000 broadband customers out of a total customer base of 100,000.

“When we pushed for FRIACO, Eircom resisted and today it is itself signing up significant volumes of customers. When we pushed for DSL, Eircom resisted and today it has 90,000 broadband customers and is citing broadband as the cornerstone of its entire strategy. Now we want Eircom to realise the benefit of treating wholesale as a realistic business opportunity and beef up its wholesale arm.”

Esat BT product director Peter Evans confirmed that the process of LLU was proceeding at a painfully slow pace some six years after deregulation was introduced to the marketplace. He said that out of 1,000 telecoms exchanges in the country only 41 have so far been opened up to Esat BT. In total, he said, a mere 2,500 actual phone lines have been unbundled from the local loop.

Murphy contrasted the situation in the State with that of Northern Ireland where on 24 February the entire province will be completely unbundled. “We have some 100,000 broadband customers in the North. Last week we had 2,700 orders for broadband in Northern Ireland. We’ve reached the tipping point in that market place. There are 50 companies in the North alone offering broadband services”

On the contrary, Evans added, demand for broadband services in Ireland is beginning to stagnate due to the inability of operators to introduce newer, more innovative offerings.

Murphy said that in the North, Esat BT is beginning to trial SDSL services – considered the next generation to standard ASDL services promoted by Eircom and Esat BT. He added that the company is readying a consumer voice-over internet protocol offering that it intends to rollout this summer and confirmed that the company is in discussions with all mobile operators about potential mobile virtual network operator services.

Murphy said: “Eircom’s behaviour raised questions about its commitment to true competition in the broadband arena – their current play will most certainly stymie any chance of achieving the stated target of 500,000 broadband connections. I call on ComReg to undertake a comprehensive review of the current wholesale broadband model that is clearly deficient in driving the kind of market we need.”

By John Kennedy