ALTO and the slow road to deregulation

27 Mar 2003

The creation of the Association of Licensed Telecoms Operators (ALTO) was umbilically linked to the deregulation of the Irish telecoms market here in the late Nineties. Before that, Eircom enjoyed a monopoly position in the marketplace and a lobby group representing the interests of new entrants to the market was, by definition, unnecessary.

As ALTO’s chairman, Iarla Flynn (pictured) has the unenviable task of representing the interests of a dozen disparate telcos looking to roll back the influence of Eircom in the marketplace and grab a share of the market for themselves.

Compared to the mobile market that is dominated by just two players, Vodafone and O2, the fixed line area is ostensibly more competitive. While Eircom’s continued dominance in the market is undeniable, ALTO’s rollcall of members range from the very large, such as Esat BT, to niche players like Swiftcall.

Perhaps surprisingly, the most immediate challenge for Flynn is not getting a better deal for ALTO members but convincing them that the lobby group is itself worth its salt. “The environment is very different now,” he explains. “Companies are very cost conscious and want to be sure they get good value out of going into a group like this. A lot of representative groups have seen their numbers fall away in the last couple of years but happily ALTO has managed to retain its membership,” he continues.

Still in his first year as chairman, Flynn has focused on strengthening ALTO’s organisation and financial affairs while simultaneously pressing his members’ case in a deregulated market. “It takes time to develop a position out there but I think we’re well on track,” he comments. “I think the reason ALTO exists is that there’s a need for a voice to support the growth of competition in the market and I don’t think anybody is specifically pursuing that agenda,” explains Flynn.

A competitive market is the Holy Grail and will bring with it real lasting benefits, Flynn believes. “If we have a competitive market, you’ll get long-term sustainability in terms of investment, innovation and consumer choice with prices going down. If you don’t have a competitive market but one that’s dominated by a small number of players, well then you’re at the mercy of those players.”

Flynn hopes that 2003 will be the year in which broadband internet access finally makes real headway in Ireland. “We believe we have the functionality in terms of networks but we’re just not using them as efficiently and as effectively as we can do. So the key challenge for this year will be getting high speed out there and getting people to take them up.”

DSL (digital subscriber line) is the platform that will bring broadband to the masses but Flynn reiterates that competition will be needed to drive demand. The issue that continues to deter a lot of would-be users is price, he feels. “I operate as a consultant myself and have an office here in town. I’m stuck with a 56k modem at the moment. I looked around at what was available but was quoted a connection charge of about €200 and a monthly charge of well over €100. While pricing is at that kind of level, there’s no way you’ll see large take up of DSL among small businesses and the residential market. In the UK, we see DSL and high-speed packages available for the equivalent of €30 to €40 a-month and the results there are plain to see. There are something like 30,000 new connections every week.

“The other thing that’s happening there is that out of that 30,000, all are supplied on the BT network but about half are activated for other operators using the BT network. Clearly, they have managed to develop a competitive market. Prices are coming down and consumers have responded with a very large take-up. I think the exercise can be repeated in Ireland but the prices will have to come down.”

He gives a cautious welcome to the recent agreement between Eircom and the Commission for Communications Regulation (ComReg) which will see Eircom charge other operators €27 per user per month to provide DSL services over its network but wants to see the system work in practice before making up his mind. “As with a lot of these things, the devil can be in the detail. I certainly welcome the prices coming down but we have to wait and see the structure and pricing of the actual wholesale service and then see how it actually operates in the market,” he says.

Whereas most organisations look to secure their long-term survival, ALTO hopes to put itself out of business and that is how Flynn will ultimately judge its success. “If we get to the stage where there’s an environment in the Irish telecoms sector which attracts new companies in, which provides them with regulatory and legislative support and gives them a fair opportunity to compete in Ireland, then there’ll be no need for ALTO to exist. I think we’ve some way to go yet.”

By Brian Skelly