Magnet chief proposes Universal Service Fund

12 Oct 2007

The head of broadband provider Magnet, Vern Kennedy, has called for the creation of an industry-wide slush fund in which every telecoms operator would contribute €3 to €4 from every telephone bill as a means of making it easier to provide broadband to economically unviable areas of Ireland.

Kennedy said that this method has been applied in the US and many other countries and has resulted in increased broadband rollout in regional areas.

“I have a farm in Upper State New York that wouldn’t be viable for any broadband provider but I can receive a full 1MB non-contended broadband service from a small telecoms firm that availed of a Universal Service Fund.”

At present, Magnet has access to 40 unbundled exchanges around Ireland and provides fibre-to-the-home services in 22 new housing developments around the country.

However, only 85pc of Ireland’s population can access broadband services because it is not viable for operators to provide services in rural areas and the industry is at loggerheads over automation of local loop unbundling (LLU).

“Many countries impose a surcharge on everyone’s service. In the US the Universal Service Fund charges US$2 or US$3 for every phone bill. Very quickly this grew into a multi-million dollar fund.

“Carriers who wanted to go into difficult areas could pay what they normally pay to access an area and the extra cost would be carried by the fund.”

Another option is to require a dominant monopoly player to allot a certain amount of their capital programme each year to less developed area. “The industry wouldn’t care too much about that option because it breeds inefficiency.”

Ireland’s economy, Kennedy said, is at significant risk because of the existing communications infrastructure deficit and ComReg and the Minister for Communications need to act fast to repair the damage.

“The business market for telecoms will self-optimise because they need the best and naturally telecoms operators like ourselves will gravitate to this market but for the consumer the reality is telecoms firms won’t invest in areas unless they are sure they’ll get a return on their investment. That means the industry is unlikely to provide broadband to every citizen, village and farm unless they can leverage a return.

“A Universal Service Fund would be a practical and civilised way of resolving the problem,” said Kennedy.

By John Kennedy