I welcome the following: Mr. Ronan Lupton, chairman of ALTO, Alternative Operators in the Communications Market; Mr. Gary Keogh, CEO of Colt Telecom Ireland; and Mr. John Quinn, regulatory director of Smart Telecom. The joint committee has invited representatives from ALTO to discuss future market development and stimuli for telecommunications. Before we begin, I advise everyone that while members of the committee have absolute privilege, this privilege does not apply to witnesses appearing before the committee, which cannot guarantee any level of privilege to witnesses appearing before it. Furthermore, under the salient rulings of the Chair, members should not comment on, criticise or make charges against a person outside the Houses or an official by name or in such a way as to make him or her identifiable. I invite Mr. Lupton to commence his presentation.
Future Development of Telecommunications: Discussion with ALTO.
Mr. Ronan Lupton
I will begin by introducing the ALTO trade association to the committee. Deputy Coveney will be familiar with us from years past. I will outline our purpose and member representation before addressing the nuts and bolts of my presentation on future market development and stimuli for telecommunications in Ireland. We will be happy to address questions from committee members, be they controversial or otherwise.
The ALTO group has been existence since 1998. Our purpose is to foster competitive access to the telecommunications market, obtain equal access for alternative telecom providers, encourage investment, promote competition, represent our members and provide access to alternative network providers in Ireland to Europe, which we do through the European Competitive Telecommunications Association, ECTA. We plug directly into ECTA. I am a member of the board of ECTA and as such meet with its member representations. We have direct access to Brussels. I am sure it is in this regard Deputy Coveney and I met.
Members will note from the slides that we have a selection of members, many of whom they will know from the broadcast and telecommunications sectors, including British Telecom, Verizon, ESB Telecom, Smart Telecom, Cable & Wireless, Budget Telecom, Magnet Networks, UPC, Colt Telecom, 3Playplus, Irish Broadband and eNet. My delegation, as introduced by the Chairman, are Mr. Gary Keogh, CEO, Colt Telecom, and Mr. John Quinn, regulatory director, Smart Telecom. I am chairman of ALTO. I will now hand over to my colleagues who will introduce themselves and set out their roles and provide the joint committee with a flavour of what their companies are doing in the Irish market.
Mr. Gary Keogh
I run the Irish operation of a company called COLT Telecom Group SA, a pan-European telecoms company operating across 13 countries. We have a presence in 42 cities across Europe. Our real strength as a telecoms company is that we own the majority of our infrastructure. We have dug trenches and roads right across Europe and have end to end fibre connectivity from Turin to Stockholm and into Dublin. We have been in operation in Ireland for ten years and have been successful here. We mirrored on the success of the IDA because obviously with a footprint in Europe we are able to connect all the FDI companies that come into Ireland with the telecom services they need to compete out of Ireland as a launch pad into mainland Europe. We currently employ 44 people in Ireland and would like to grow further in this market.
Mr. John Quinn
I represent Smart Telecom, which will be known to many members — although in the past for all the wrong reasons, it is hoped going forward for all the right reasons. We are the largest local loop unbundled provider in Ireland which means we actively go into Eircom exchanges and input our own infrastructure to provide services that differentiate us from the competition. We are also very strong in the corporate and government markets and are an indigenous Irish company.
Mr. Ronan Lupton
If I may, I will now commence the presentation. The first topic we want to cover is what it is we provide. We provide a viable alternative. Alternative operators are foreign direct investment facilitators. We deal on a daily basis with large global operations that are constantly seeking opportunities to invest in markets. Obviously, we are focused in the Irish environment and economy but do have a reach far beyond our size in terms of the organisations in which we operate.
There are approximately 6,000 jobs in the telecommunications sector, many of which we and subsidiaries of our organisation facilitate. Investment in networks and infrastructure is constant, despite the fact it is a bad news story at the moment in terms of some topics in regard to networks. An estimated €500 million is invested on an ongoing basis in telecommunications networks in Ireland. I am proud to state that much of that investment comes from our membership. In addition, alternatives bring global reach to Ireland, a point I made earlier when discussing the first slide of the presentation. We bring an opportunity to leverage our connectivity to other places in the world.
We have four requirements. First, we need telecommunications to be treated as a priority by Government. There exists a belief that we are not at the top of the list in terms of Cabinet priority. While we cannot prioritise ourselves over global economic financial crises, we would welcome a renewed sense of priority in terms of the telecommunications market and environment. Second, we seek further proactive engagement with ComReg and other regulators in respect of our own markets and stimulating activity. Third, we require a clear plan on next generation networks, NGNs, and next generation access, NGA. Ireland is falling behind in respect of where we should be in terms of planning for next generation networks and access. I make the point that while my members already have next generation networks operating in Ireland, the incumbent is to some extent viewed as an operator that does not have such a plan at the forefront of its mind. The fourth requirement is contentious, namely, access to State facilities. Our operators and members are currently struggling to get decent access to some State facilities that are lying idle. For example, National Roads Authority ducting remains idle as does other Bord Gáis and waterway infrastructure. It would not cost the State a huge amount to crack that nut and allow us access to those facilities. They are our four priorities. I will return to these issues when we come to a later slide.
On the macro-economic environment, it goes without saying that trading is difficult at this point. Our members are in a stable position and we are currently seeking opportunities to assist this particular market. Our customers, from the man on the street to our high end corporate customers, are seeking better deals and state-of-the-art facilities. We believe that addressing a number of small issues in the market would provide the stimulus we need to proceed with providing those services which are constantly requested of us.
Slide number 6 is taken from an ECTA report. It shows that Ireland is viewed by the European market and European trade associations as performing relatively well in terms of legislation on policy considerations but weak in terms of regulatory and market outcomes. This is an issue we have been proactively addressing with Government and the regulator since 1998. It is a disappointing statistic.
The following slide is also interesting. Members will note the arrow on the left which points at Ireland. There are two sections of the graph I would like to highlight, namely, sections 3 and 5. Section 3 looks at the efficiency of the NRA or regulator and section 5 looks at the economic market conditions. There is a major disjoint between the two because they should not be all go and all stop. There should be an in between point. This statistic comes from an independently audited report undertaken for ECTA. I am sure members are aware of the ECTA score card, which is a newsworthy item published quarterly. The conditions for communications and the market in Ireland are unusually weak, for which there may be a number of reasons. I wished to draw this issue to the attention of the committee which may wish to put questions to Parliament at a later time.
On stimulating the market, there are a number of small fixes that we believe will bring stimulation, including enhancement of regulation. Our experience is that disputes, remedies and reviews of market procedures are particularly slow, which is not good for the market. We are a fast moving environment. Three months is to us a long time. While ComReg is doing its best, it is taking up to 18 months in some cases to resolve disputes. This is inadequate.
Another small fix is a technology product called wholesale ethernet. While ComReg has made good inroads in regard to an outstanding dispute in this area, we are still awaiting the outcome in this regard. International businesses are asking for this product which we are striving to bring forward. On broadband, local loop unbundling pushes the boundary of services out to the residential market and to small to medium enterprises. Members will have noted from the recent PricewaterhouseCoopers report that it believes our economic recovery will require output and exports from the country. We are making it a priority to facilitate indigenous businesses outside the key population demographic areas and making broadband and LAU work in an efficient fashion, which they have not done to date, is a key issue for us. It will be a key stimulating factor.
I referred to broadband, NGN and NGA. ComReg and the Government facilitated discussions 12 to 18 months ago in this regard but they have stopped dead. Deputy Coveney and other committee members were engaged in that process at the time. We need to have them reopened as soon as possible in order that we can pull ourselves up the international league table where NGN and NGA are concerned.
The committee has heard from Eircom about its concerns in investing €200 million in the copper infrastructure environment and meeting its USO targets as set out by ComReg. The plans are due to be in place by July. Poor service and performance are bad for the consumer, business and so on; therefore, a key issue for us in regard to market stimulation is to have these matters remedied as quickly as possible.
With regard to the stimulation of investment, our requests are for the Government. They are simple messages, the first of which is execution. The Minister put a great deal of work, effort and money into having a meeting with industry representatives last October. Unfortunately — it is not his fault — the banking crisis occurred; economics ground to a halt and his attention was focused elsewhere. The residue was the removal of funding from the national broadband scheme. However, we need the suspended policies to be reactivated quickly. That includes bringing forward the Department's consultation on NGN, for which we are looking. Execution is the key to that issue to enhance our ability to plan and invest in national networks.
The second request concerns access to State facilities, about which I laboured. We see many quick wins for and lower spends required of the Government to give us access to State assets such as the NRA, Bord Gáis and Irish Rail ducting and so on. ALTO suggests reforms to the Planning and Development Act 2000 and the 2001 regulations which marginalise telecommunications operators. We are eighth on the list for access to these facilities. However, there are others which I have listed in the presentation which we cannot get at. There is no commercial model or legal framework for access to these State networks which lie idle. Access is key for us.
I refer to foreign direct investment. Our members are permanently engaged with tendering arrangements and bidding. All this does is promote the economy and telecommunications. We receive a great deal of assistance from the Department of Enterprise, Trade and Employment but it could assist us in a better and more proactive way to resolve the execution and access issues and allow us to plan and secure the investment available to help the market and stimulate the economy.
I mentioned the PricewaterhouseCoopers report and exports. Indigenous business is important; we need facilitation of services to businesses, not only those based in the key city areas where broadband and technology are relatively widely available and so on. It is a priority and fits with the Government's strategy on the MANs initiatives. There are deficiencies which need to be dealt with.
The next slide deals with NGNs and NGA. Our operators are providing NGNs for their own backbones, yet industry discussions have stalled, which is a significant problem. We ask the committee to give some thought to this. We require a collaborative approach from the Government, the regulator, the incumbent and new entrants to resolve matters on how to frame NGNs and have them operate efficiently in the domestic market. NGA highlights the last mile problem. We have problems as matters stand without introducing NGA but it is needed. A big bang approach is costly for all and binding agreements create problems through their consequences and people using stalling tactics. We have heard noise from the European Parliament and various discussions with President Barroso on Chancellor Angela Merkel's proposal for regulatory holidays. Such a holiday would be fatal for telecommunications and NGA in Ireland. I co-signed a letter from ALTO to President Barroso about this. It is key that we do not go down the road of providing for regulatory holidays for specific sectors of the market.
Portugal and Greece have mandated access to fibre and state infrastructure through primary legislation for NGNs and NGA. It remains to be seen whether it is consistent with state aid rules but the approach is interesting. Most of our counterpart trade associations in Europe are watching this closely. The message on the slide is important, but from a political point of view in Europe, this is what we are working and focusing on and it is key that no member state suggests a solution that may suit it to the detriment of smaller countries. I included this slide twice on purpose because the economic environment is difficult. We need state-of-the-art facilities and until the discussion on NGNs and NGA is initiated again by the Government or ComReg, nothing will happen. ALTO is not powerful enough as a trade association to push it. We are knocking on doors to try to stimulate the debate. Fixing a small number of key issues will provide the stimulus the market requires to proceed.
The next slide concerns EU proposals. The new European communications framework package is being finalised and we do not want anything to be short-circuited. We are engaged fully to try to have Ireland's voice heard in the most proactive and constructive fashion possible. I appeared with Mr. O'Halloran before the Joint Committee on European Scrutiny to discuss the functional separation remedy proposed in the framework. It is key that ComReg has that remedy available. We do not necessarily say it should be used but agree it is critical for regulators to have access to such a remedy to open networks and so on. We support best practice in the regulatory framework but do not under any circumstances support the notion of a pan-European regulatory body which is being discussed at length in Brussels. Various people are for and against it but we do not favour it.
I refer to the way forward. The resolution of implementation issues facing ComReg is key to stimulating the market and will unlock many of the issues raised. We look forward with anticipation to the Department's response to the consultation on NGNs. I hope our message about execution will get across. It is critical that the Government proceeds, whether it is the current Government or its successors. Access to State facilities is critical and we need to crack that nut. I referred to foreign direct investment and facilitating exports by indigenous businesses which will help us to climb out of the economic recess in which we find ourselves. We are all in favour of radical ideas in government and innovative thinking.
I thank the committee for taking the time to listen to my presentation. If members have questions, whether difficult or easy, the three of us are here to address them.
I welcome the witnesses and thank Mr. Lupton for his presentation. I remember meeting him in Brussels in a different political life.
Some of my questions relate to what has been said and others are linked to that. On the consultation that was initiated by the Government last year on NGNs, there was follow-up on that last summer whereby the Government made a commitment to a series of actions. It was decided that a ten-point plan of action would be implemented before the end of the year. Mr. Lupton can correct me if I am wrong, but only two or three of those actions have been implemented. Everything seems to have ground to a halt. It is not the only area of Government policy that has been distracted by other issues. I agree that we need to get back on track with NGNs. I am interested to hear specifics in terms of the actions the Government should take.
I agree with the point made about open access to infrastructure. We should require open access to backbone infrastructure, Eircom infrastructure and ducting for companies to lay or share fibre. I am interested in hearing a more detailed comment on the timescale of that in terms of the other commitments made by Government following the expensive consultation process.
The national broadband scheme, NBS, was not mentioned. Are the witnesses happy that the solution for the NBS is a satisfactory one from their point of view, to provide broadband and sufficient bandwidth to what is essentially 10% of the land mass of Ireland through the national broadband scheme and 3, which is the company that won the contract? Are the witnesses happy that wireless technology predominantly can do the job it is expected to do in terms of bandwidth delivery?
I had an interesting meeting this morning on the capacity and cost of satellite broadband. A number of new products are coming to Ireland that claim to bridge the digital divide in a far more ambitious way than has been done in the past. Is ALTO buying in to the satellite broadband revolution? If it is, then it can provide solutions especially for isolated rural parts of Ireland that do not have solutions currently.
I am not sure how involved ALTO is in the digital terrestrial television, DTT, discussions but the announcement by Boxer last week that it was pulling out of its 12-year contract to provide commercial DTT to Ireland creates a huge headache for the Government in terms of DTT policy. It also creates a huge problem for RTE, which is trying to finance the infrastructure to make DTT viable so that we can prepare for analogue switch-off in 2012. The problem now is that RTE has already spent €40 million on putting infrastructure in place to facilitate its own free-to-air DTT service on the multiplex it has been given. It has another €60 million to €70 million to spend to complete the job. However, it could only afford to spend that if it was getting significant revenue from Boxer, which was also going to use the same infrastructure. That revenue is now gone and there is no viable plan currently to replace it with revenue from anybody else.
The BCI is considering the next best tender bid from a consortium called OneVision which is made up of TV3, Eircom and Setanta. Those are three important companies but they are all under significant financial stress. It does not strike me as a consortium that will be able to make the kind of investment we need in DTT. There is a genuine problem and I would like to hear whether ALTO has thought about that and what its views are on it. Does Mr. Lupton believe we should re-start the tendering process to look for new joint ventures that may wish to compete in the DTT area?
I am pleased Mr. Lupton is calling for new, ambitious thinking because Ireland faces enormous economic challenges currently and telecommunications and the roll-out of infrastructure is one of the few areas where we can create immediate growth. Irish people have shown themselves to be extraordinarily interested in using telecommunications infrastructure if it is provided for them, whether it is mobile telephone technology or broadband. The current economic crisis is an opportunity for real growth in the telecommunications area but the opportunity needs to be grasped. A far more ambitious approach needs to be taken than is currently being taken.
I apologise for being late. I thank the witnesses for their presentation. It is timely that they are here, given that they represent part of a growth sector. The assessment carried out by the ESRI is pretty bleak and, if necessary, we must react in a way that is ambitious and radical.
Deputy Coveney asked many questions and I have a couple of points to make. One is related to a point he made about technological advances and developments in terms of wireless or satellite. It is very easy for us to be dazzled by the next product that comes along but how it works out is much more difficult for us to assess. Perhaps Mr. Lupton would elaborate on his general approach and viewpoint?
The future of Eircom has been the subject of much political debate. One thing we all agree on is that privatisation was disastrous. We have an element of essential infrastructure starved of funding and running up big debts. It is difficult to see a way forward if there are further transfers of ownership without any strategic approach. We should nationalise Eircom and be done with it. If we can nationalise banks we should be able to nationalise essential infrastructure. Perhaps Mr. Lupton would comment on that? I am sorry I missed the beginning of his presentation.
My second point relates to data collection. I am surprised that in talking about up-to-date technologies the information for consumers is patchy and dependent on operators advising the Department. We have the famous map that is a source of constant criticism from Members as we know from our constituents that some people cannot get broadband. In some cases people are told they can get broadband but they cannot, or else it is so expensive that they cannot afford it. The national broadband scheme will cover 10% of the land mass. That is welcome but it still leaves thousands of people without access to broadband. The Department provided the figures but it does not seem to be able to tell us exactly where coverage is provided. Anecdotally, we know there is a serious deficiency. I would welcome a comment on that from Mr. Lupton.
I have two other questions, one on regulation. I have asked the Minister many times — but particularly now that he is introducing elaborate broadcasting legislation to put another quango in place — to adopt a more coherent approach and have one regulator dealing with content and technology and communications rather than having ComReg and a new broadcasting authority. That is so simple and obvious I am embarrassed to raise it again. I raise it because the Minister pursues this approach of having two regulators in the same area. I would have thought the experience with DTT is really a lesson in how it is important to have one regulator as they have in Britain and in other countries. It is not fair to ask, but there is a suggestion that there should be a Department of regulators, that regulators across the board should work in a much more co-ordinated fashion.
It is interesting that the delegation talks about quite a broad area, such as planning issues relating to ducting and so on. The message I get is that there is not enough co-ordination, and that is a management requirement, not just in the public sector but in the private sector as well. I appreciate that ALTO has a good profile but it seems to me that the question of co-ordination is a question we must address in both the private and public sectors. Perhaps Mr. Lupton will comment on that. His final point is that he would like to see radical ideas. Will he flesh that out? What does he mean? Is he saying the presentation he made is radical because it seems to be common sense or is he saying there are other things that could be more radical in terms of delivering the kind of essential infrastructure we require in communication if we are to make it out of the recession in a way that will ensure prosperity?
I thank the delegation for its presentation. I may not be here to listen to the responses to my questions because I must be present for the Order of Business in the Seanad.
The issues raised by the two Deputies are crucially important, and I also wished to address some of the same issues. I want to hear the delegation's vision of what should happen on the ground. On local line unbundling, will the witnesses address the issue of quality? There is no point in unbundling if the quality of the copper wire is not good enough to deliver the service. That is a crucial issue. That should be considered in the context of the question raised by Deputy McManus on the requirement on Eircom, because if it unbundles, brings up the quality and then loses customers that is a no-brainer. Will the delegates take us around that circle?
Mr. Keogh made a point about Colt Telecom's European-wide network. That is creating significant problems for ordinary customers. If Colt Telecom delivers a satellite service based through Luxembourg and I operate a WiFi radio, I find I cannot tune into BBC Radio 4, even though I may be within its broadcasting area. The technology seems to stop at the point of delivery of the service. Can that be dealt with? Can Colt Telecom supply a satellite broadband service which might be routed through Luxembourg and at the same time ensure that it does not deprive me of access to RTE or similar? Will Mr. Keogh comment on the secret relationship of RTE and Sky, which allows RTE to deliver the Sky service but does not appear to allow anybody else to do it? That must surely be a major inhibitor to Colt Telecom selling a service which in every other country in Europe would naturally include a TV service. Much of the broadband service on sale here does not naturally include a TV service. We need to know about this significant issue because we are trying to get to the bottom of it.
Members are very well aware that the broadband service in County Mayo is one of the worst in Ireland. We are also well aware that we have spent tens of millions to put a gas line into County Mayo and that the gas line includes a blank empty conduit, which could supply broadband to that county. The issue of access to such conduits has been mentioned in passing. Will Mr. Keogh be absolutely specific and outline what it takes to unblock that facility? Does it require primary legislation, regulation or a statutory instrument? If I have that information I promise I will raise that issue in the Seanad with the relevant Minister.
I echo the point raised by Deputy Coveney; there is no gap in the market. Some of us believed that delivering digital services through terrestrial masts was asking for trouble. As far back as 1990, some members suggested that we should deliver mobile telephony through satellite. I have certainly held that view for a long time. We do not need any masts, and we should be deliver the service through satellite from here on in, which means that places such as the Black Valley in County Kerry would have a similar level of service to everybody else in the country. Could the members of ALTO fill the gap that is now being created by the withdrawal of Boxer? Let us forget about the €50 million that RTE spent on masts — we spent as much as that on e-voting machines. Is it possible that members of ALTO could put forward a proposal to deliver the service via a satellite channel owned by the State so that the State has control over it and is not dependent on the owners of ASTRA?
I regret that I will not be able to wait to hear your response, but I will check the answers. I very much appreciate the points made by the delegation.
I welcome the delegation and thank them for their presentation. Having listened to them, it reminds me of the end of an episode of "ER" with the NGNs and NGAs. I am not up to speed on such terms.
On the key priority of regulation, the delegation outlined the difficulties with the regulator taking from three months to 18 months to resolve disputes, which is a long time. In our arena, they say a week is a long time in politics. Has the delegation any suggestions on how this problem could be overcome, or what could we as the committee do to highlight that problem and get to the bottom of it? When one considers the speed of change in communications, where something that is modern could be obsolete in a week's time, a time lag of 18 months to have disputes resolved in unconscionable. ALTO has been stone-walled by Eircom. Eircom seems to present problems for many people. When the delegation from Eircom appeared before this committee, it stated that it had effectively abandoned the delivery of broadband in rural Ireland. The exchanges had been upgraded by Eircom, but if one lives three or more kilometres away from the exchange, the service rapidly deteriorates. One finds that there is no service when one is five kilometres from the exchange. Can ALTO offer an adequate broadband service to the people in rural areas?
I reiterate Senator O'Toole's point on access to State facilities, particularly ducting laid by Bord Gais and the NRA in the course of its operations. Why is there a problem with such access? In many provincial towns in rural Ireland there is a mast area network system installed and lying idle; will this help ALTO in providing a service?
Mr. Keogh stated that Colt Telecom operates in 13 countries and has its own infrastructure. What level of infrastructure does Colt have in Ireland? I would be particularly interested if Colt has a role in providing a service to foreign direct investment companies in the mid-west and Munster region? Is it possible for local indigenous companies or entrepreneurs to engage with the service provided by Colt?
I welcome the delegation and I found its presentation very interesting. I am interested in unblocking the blockages and wish to know what the committee can do to assist in the process, especially in regard to the ducting laid by the NRA, Bord Gais and Iarnrod Éireann. I agree with the previous speakers who highlighted the major problems in rural Ireland and I look forward to working together to clear the blockages.
I apologise for being late. I read the submission and I noted the heavy emphasis on the ineffectiveness of the regulatory system. What specific outcome does ALTO wish to see in relation to ComReg? It may be difficult for ALTO to comment openly regarding ComReg. However, it is generally recognised that our regulatory system has been weak in a variety of areas. Given the very severe financial difficulties of the owners of Eircom, which is the dominant player, investment will probably be scarce. What is ALTO's view on that?
Mr. Ronan Lupton
I will deal with two issues in the first instance, the national broadband scheme, to which Deputy Coveney referred, and the Eircom position. My delegation will deal with the rest of the questions, if that is all right with members.
Regarding the national broadband scheme, we welcome the fact that a new entrant operator, namely 3, won the bid. It is good to see a new investor coming into the marketplace and winning. Government funding of the national broadband scheme has been cut. We cannot blame anybody for that. It was a natural outcome of the budgetary review. It is disappointing that it happened.
In regard to mobile technology, we are relatively neutral in respect of what the successful tender or bidder can provide. It remains to be seen. We will be quite positive in regard to its international moves. Its track record is very good. To that extent we welcome the status of the national broadband scheme and output at this point. We would make the point that the same bottlenecks exist in the fixed network and access points as I mentioned throughout my presentation in relation to backhaul and bringing communications to the population centres and then on into the international networks. The same challenges exist for the successful challenger or bidder with regard to the NBS but from our point of view it is a case of "wait and see". However, we are positive because a new entrant got the contract. It would have been difficult for us to swallow if an incumbent had managed to get it. We do not blame the Minister for that budgetary cut. It was unfortunate that the economic environment overtook what was going on in respect of that.
With regard to the Eircom piece, it is quite a newsworthy issue. We do not particularly want to go back to the old PTT days of full nationalisation and so on. Members may have seen some comments from me in the press to the effect that the Government should consider looking at investment in some aspect of Eircom's network or in a part of its operation to stimulate investment potential. I certainly would not advocate a return to the old days because it would cost the State far too much in terms of the debt load.
We have concerns regarding the union's stake in the operation. People are entitled, as citizens, to be members of unions, but the union has done exceptionally well over the years with respect to the privatisation of Eircom. We would like to see it remain in private ownership if at all possible. However, if it decides on further borrowing it will make matters much worse. From our point of view, the vast majority of our members are strong and viable customers of Eircom and we would like to see Eircom take the view that its wholesale revenues are important to it, make its product offerings more efficient to us and allow us to drive stimulation and stimulus and investment in terms of our businesses because, fundamentally, it is benefiting from it as well.
This relates back to the regulatory question that Deputy Coonan and Senators O'Toole and Walsh asked in regard to logjams. When a decision is made by the regulator, an appeal process in the courts or through ComReg's processes is often used to delay its implementation for up to three or four months or to stop a remedy or stop a market development in its tracks. Many appeals that have been taken are purely a tactic and disputes that have gone through ComReg's management or court initiated litigation have been resolved in advance of going to trial. ComReg has a constant challenge in terms of its work outputs. When 15 or 20 people are looking at one document it is very easy to pick holes in it. Many of our members have one or two people looking at a document and we are quite happy with the progressive way ComReg is putting matters forward.
Deputy McManus may not have seen it, but I had a slide that indicated that the institutional political framework in Ireland was correct in terms of regulation but in terms of delivery it showed a big red or a stop. That is owing to belligerence and stopping tactics of a number of operators. I will not name them but it is fairly obvious who they are, given what they do not want to see in terms of their networks being opened up.
Further, in relation to something I read recently, I do not believe our industry is getting enough priority at Cabinet level. The issue of Digital Britain came up in the 2009 UK budget last week. In one publication it is stated:
Budget 2009 announces that the Government will pursue Universal Service in broadband, at a speed of 2 Megabits per second, by no later than 2012. This target will allow virtually everyone to experience the benefits of broadband, including the increasing delivery of public services online. ... The Government will consult with the BBC Trust on how the emerging underspend from the Digital Switchover Help Scheme can be drawn on fund Universal Service and take-up.
It stated further, and this relates directly to the point made by Deputy McManus:
The Government will review the powers and duties of Ofcom ... so that it can "strike the right balance between delivering competition and encouraging investment".
ComReg looks after a great deal with limited resources and there are quangos sitting around dipping into broadcasting and content areas and so on when it suits them. The committee might, therefore, be right in terms of creating some type of all-encompassing regulatory body to deal with these issues. Similarly, there are many economic issues in regard to which there are competence questions, such as whether we should go to the Competition Authority to have them resolved or whether we should defer to ComReg. I do not mean that in a negative way with regard to ComReg, but some of the issues we bring to the table are highly complex, centring around local loop unbundling and how the pricing and the access models work in relation to that.
I will finish on those two points and hand over to my colleagues to deal with some of the other questions raised. I will ask Mr. Gary Keogh from Colt Telecom to speak on the ducting issue and give his views from an international business perspective on the execution of the three points from the ten point plan the Minister outlined. I will then hand over to Mr. John Quinn to deal with the data collection issue that Deputy McManus asked about in respect of getting on top of the various coverage issues. There are some other issues with which we can deal at the end.
Mr. Gary Keogh
We mentioned radical thinking. As I mentioned earlier, Colt Telecom is a pan-European company and we are watching what happens in other territories outside of Ireland to see if we can learn from it. There was one interesting development about two years ago when primary legislation was passed in Portugal which forced the incumbent, the equivalent of our Eircom, to make all if its duct network available to other operators so that they did not have to dig up the streets. They could pull fibre through the duct if there was no fibre in it or they could use fibre that was already in the duct. That was mandated two years ago. It is taking some time to implement it but it is a very positive step forward. It means the local Colt Telecom company in Portugal no longer digs or opens up the roads. That means our reach is automatically extended nationally across Portugal.
Is the equipment of Eircom privately owned or publicly owned?
Mr. Gary Keogh
My recollection is that it is privately owned. It is not a State company. The second thing to have happened recently is an attempt to extend and open up all duct infrastructure to make it available to all parties on an equal basis. Whether it is an electricity network, a road network or a competitor's network we all make our infrastructure available. That is the kind of stimulus which the Irish market needs.
Deputy Coonan asked what Colt Telecom had done in Ireland and about our network infrastructure. In the past ten years we have dug the streets of Dublin and have put in an investment of some €20 million to open up the roads. It is horrendous work and it is very difficult to meet commitments to customers in terms of the delivery schedule. However, we have done that and we are very successful. We have no dependency on the alternative operators except where we share a duct. We do not use the Eircom network except when absolutely necessary.
Why is that?
Mr. Gary Keogh
All our services are next generation and are predominantly delivered over fibre. If we were to deliver it on copper it would be an inferior service, at least to corporate customers. We are constantly striving to extend our fibre reach across the city.
We are successful in the regions in delivering services to multinationals which need connectivity back to Europe. We have worked in conjunction with eNet, which has been a great advantage to Ireland Inc. in delivering high-speed services, though it does not solve the rest of our problems. We are very well structured in terms of our ability to support foreign direct investment companies in Ireland. We are also able to deal with the majority of the residential market for some form of broadband. Cost may be an issue but there are many different technologies whereby it can be done. The area in which we struggle is the SME marketplace and indigenous industry. Across Europe, Colt Telecom supplies many strong, innovative technical products for the SME market to help it grow and prosper and we would like to bring such services to the Irish market. However, it is impossible at this point in time, for many of the commercial reasons outlined in the presentation.
Mr. Lupton asked me to comment on the ten-step plan that the Minister, Deputy Eamon Ryan, introduced. It is a positive step in the right direction but we need action and it needs to be implemented now. Other steps taken, such as those to provide capacity into the country, protect our competitive edge and we compliment the Government on the global crossing initiative of 12 years ago because there would be no foreign direct investment in Ireland without it. We are now looking for another radical way of thinking. It would be impossible to put a cost-benefit analysis on investment in the network but it needs to be done now.
Mr. John Quinn
I thank members for taking the time to see us. On the subject of Eircom, one of the things none of us can do is change the past. We are where we are and it is irrelevant to discuss the mistakes that may or may not have been made. It comes down to practicalities. There were two very good pieces of State infrastructure under the national development plan and every single ALTO member uses that infrastructure to provide services to its end customers. As Mr. Keogh said, the two pieces of infrastructure in question are eNet and ESB telecoms. They are examples of State-owned assets facilitating competition on a very open basis and 90% of ALTO members would not exist without them.
While I do not think it is a good idea for a government anywhere to run a retail telecommunications operation and incur all the overheads and complications that go with it, the provision of fair and equal access to network infrastructure is the key. Eircom also needs that access and owns some of the infrastructure already, but more could be provided by way of duct, through the NRA, Bord Gáis or Aurora Telecom or by using existing fibre, vast amounts of which are possessed by a number of county councils and are currently in the ground but massively underutilised. Most of the data that leave this country could be carried on a single pair of fibres using today's technologies.
How does Mr. Quinn envisage that being managed?
Mr. John Quinn
That is a very good question. As part of the consultation on the NGN plan we will call for a one-stop-shop. Every member of the joint committee has asked where the bottleneck is and the answer is very simple. If I ring any of the organisations that have access to duct there is nobody to talk to. There is nobody I can ring to ask "Can I have access to your duct?" or "Can I have access to your fibre?" People who know where it exists cannot provide a price because they do not know how to price it. What is needed is a one-stop-shop, somebody who owns the infrastructure, can benchmark against international pricing and provide it on a commercial basis to operators, including Eircom retail. It is very important in a competitive environment in any developed economy to have a strong incumbent operator and strong competition because both keep the other efficient and drive innovation. If one part is missing the other side does not invest. Unfortunately, because competition has not flourished as it has in the UK, France and even Greece, there is not the same level of investment. Competition drives investment — it always has and always will.
Deputy McManus asked about the infamous map and over the years I have had many questions on the same subject. In compiling the map, my understanding was that for areas that had a DSL-enabled exchange, a 5 km circle was drawn and it was assumed, rightly or wrongly, that everybody in the area would get broadband. However, that is not actually the case, for various reasons such as the quality of the copper. Maps were also drawn for areas where there was a MAN development and a number of assumptions were made but all those areas have different dependencies, such as line of sight. As a result, people are coming to their representatives and telling them they are supposed to have broadband but do not. That needs to be addressed.
On satellite, there is no one technology that fixes all our problems, all of which have to be addressed by a number of different technologies. In some cases satellite will work but it is not a panacea. It has certain technology limitations that do not allow it to do what a fixed or standard wireless broadband service can do. It could be because of the fact that a satellite is far away from the Earth and signals have to travel a long distance. The big danger in putting everything into satellite technology is that satellites can blow up or float away, as happened to Astra, Intelsat and Eutelsat. They can crash into each other, as happened recently. New satellite technologies are coming along but they will not cure all ills, though they will offer a lower cost than current satellite deployments. However, people will still prefer a terrestrially-based service.
It is a pity Senator O'Toole is not present to hear this.
Mr. John Quinn
What happened with DTT is unfortunate but we cannot change the past and economic conditions have changed. OneVision has a number of weeks to come back and if it does not accept, it goes to the last bidder, EzTv. If the latter rejects the offer, I understand it will go back out to tender again.
We were asked if ALTO could provide an alternative. It is very difficult to know at this stage. The commercial position for DTT in Ireland is extremely challenging. Our friends in UPC and Sky are very good at what they do and have a very high digital television penetration rate. Freesat, the digital television service that does not carry the Irish terrestrial channels, is also widely available. We would be trying to crack a market which is already competitive in a challenging economic environment. However, while DTT will certainly be a challenge, the digital dividend of additional spectrum — I see some of our friends from the mobile phone industry in the Visitors Gallery — is vital in allowing the delivery of new services. That should be high in the minds of officials in the BCI and ComReg.
Is that the strongest argument for DTT?
Mr. John Quinn
No. DTT has been successful in the United Kingdom and other countries. Commercial entities such as BT which deliver television services through a combination of IPTV and DTT have done well. The technology is available and can be enhanced through innovation but it is vital that the digital dividend frees up the spectrum. A large proportion of ALTO members are keen to see this happen. We cannot afford to wait until after 2012 because we have to be ahead of the curve. The dividend would create jobs through the new organisations established to provide these services.
I would like to come back to the communications market and ALTO's number one priority of regulation. Having listened to Mr. Lupton's comments, we can certainly point the finger at Eircom, given that three months is a long time and an 18 months delay is totally inadequate in respect of complaints. He has stated he was stonewalled by the company and that some operators resorted to belligerence and obstructing tactics. It appears he is unhappy with the regulatory regime. Does he think the regulator should consider its position, given the strength of these criticisms? In the light of the difficulties we face with the Financial Regulator, is Mr. Lupton calling for an examination of the regulatory regime in the telecommunications market?
It is difficult for any player to criticise the regulatory authority, given its influence on the market but, as politicians, we should recognise that our regulatory systems have not been up to the mark in a variety of areas. It is up to us to seek information privately because it will be difficult to raise these issues in public. If the delegates have opinions on how the one-stop-shop might be structured, it would be useful if they shared them with us because it would assist us in opening up the market generally. Perhaps the committee could take a proactive stance in this regard.
I am unclear on the relative efficiency of copper versus fibre-optic cables. A significant proportion of network infrastructure is owned by Eircom. While I see the complications that would ensue, can an argument be made to separate the company from this infrastructure in order to establish an EirGrid-type system? People could compete on a level playing field on the retail side but the infrastructure would be administered separately. I have been highly critical of the significant increases in line rental charges imposed by Eircom once it saw how the market would develop. My interpretation of the company's actions was that it was securing these revenues against the interests of consumers and competitors. I was aghast at the ineptitude and disconnectedness of ComReg's response to a recent report from Brussels which criticised this strategy. I am not an expert and perhaps I am being overly critical in regard to the regulator's competence. I do not know whether the delegates wish to comment on the matter but I would welcome their opinion.
Mr. Ronan Lupton
To address Deputy Coonan's point, it is important to emphasise that ALTO has been operating in tandem with the Office of the Director of Telecommunications Regulation and, subsequently, ComReg, since Etain Doyle was appointed in 1997. We enjoy an exceptionally strong relationship with ComReg and, save for confidential information, clearly understand the challenges it faces. I admit that I made some strong comments on the stances taken by certain operators. I would not compare the regulatory environment over which ComReg presides with the financial regulatory issues we experienced last year. The vast majority of operators are willing to respond to requests made by ComReg. Given that only 120 staff are employed to regulate postal, television, telecommunications and, with RegTel, content matters, the key issue is that the commission is probably under-resourced. When one has to deal with a large telephone operator possessing an endless legal budget and the regulatory staff it needs to pick holes in a regulator's output, it is difficult to respond quickly. Regulation is a game of tic-tac-toe.
Is Mr. Lupton saying a period of 18 months is not acceptable or that some operators are getting away with it?
Mr. Ronan Lupton
Absolutely.
This is a reflection on the role of the regulator. Why is it allowed to happen?
Mr. Ronan Lupton
All I can say is that it is a resourcing and budgetary issue. I do not take a critical stance in respect of individuals in the regulatory body, with whom we have worked for a long time. Our relationship with the commissioners is exceptionally strong and we are certainly able to get our points across to them. The stalling tactics of certain larger operators which have significant resources are causing ComReg's woes in regard to delays. If one uses a legal instrument through the High Court, one can stop the process in its tracks and ComReg has no option but to defend its tactics. We therefore need to be careful in criticising the regulator. I want the message to be clear that our relationship with ComReg is strong, both as individual operators and as a trade association, but that we have concerns about delays and resourcing. Perhaps we need to provide further resources, as Deputy McManus noted. The resources of smaller regulators could be used to buffer ComReg's powers, for example.
I referred to the Digital Britain report and the proposal before the UK Government to enhance Ofcom's powers. Ofcom is perceived as a leading regulator in Europe but there is no reason ComReg cannot enjoy a similar reputation.
Mr. Lupton's comments are genuine but nonetheless serious questions arise. It might be worth our while bringing the regulator before us to address these questions.
We can include the Deputy's proposal in our work programme.
Is ComReg funded by the industry?
Mr. Ronan Lupton
The industry pays in several ways. Mobile phone operators are charged huge sums for allocations of the natural resource of the mobile spectrum. Fixed line operators pay 0.2% of their relevant annual revenue to the regulator. That is given back to us if it is not used but the surpluses from certain other areas go to the Department of Finance. We have questions over whether that should be reinvested and that may be for another day. Within my competence, moneys are well spent within ComReg. I do not have a concern with that but we pay and contribute to the costs of regulation. The Deputy is correct that sometimes when such a delay happens, it is disappointing. However, the constraints are as I outlined.
I live in north Tipperary, the heart of rural Ireland, but it is not remote by any standard. Small businesses and entrepreneurs in the area cannot acquire the service they crave, which is essential for them to continue in business and retain employment. However, the committee is being informed about actions taking 18 months, stonewalling, belligerence, etc. It is okay to make excuses for the regulator on the basis of insufficient resources and staff but the reality is that people in rural Ireland are suffering. We cannot continue to listen to this for another 18 months.
Mr. Ronan Lupton
I will outline an anecdotal example, which I used at a First Tuesday investment event in Dublin a while ago. A large member of the ALTO group was trying to facilitate access for a large employer in south Cork, which was trying to upgrade an access path to provide its services internationally. The pipe between Cork and south Cork was full. An NRA duct lying empty runs parallel to the pipe. It would have cost €1 million to upgrade the full pipe by installing a thread-like piece of equipment, yet the State duct lay empty.
Deputy McManus asked whether there is co-ordination in management. There is because the Department of Transport looks after the NRA ducting, the Department of the Environment, Heritage and Local Government looks after the planning law relating to it, which is a localised issue in the context of access and what we can provide, and the Minister for Communications, Energy and Natural Resources supervises how companies in the industry engage with each other. If the three Departments are not talking to each other, we hit a brick wall, which is where we find ourselves.
Senator O'Toole asked about the three concerns at the forefront of our minds regarding access to ducts and State facilities. The first is valid health and safety concerns where one is dealing with railways, power and roads. The second is the lack of a legal framework to allow us to engage with the State body — for example — the NRA, and negotiate a contract, which is a cheap fix for whoever is in government. It would not cost a great deal to do that. The third concern is the commercial framework and pricing per kilometre for the ducts, and access to them. If a member's constituents have their main road dug up, it becomes a more emotive issue than not having access to a 10 MB broadband connection when they have a 2 MB connection running somewhere else. We deal with a fine balancing act on a regular basis.
Senator O'Toole said he would raise this and Deputy McManus identified this as a management and co-ordination issue. There is no doubt about it. The Tánaiste and Minister for Enterprise, Trade and Employment has taken the Cork example on board and her officials in the various semi-State bodies under her umbrella are dealing with it. I do not have a concern about that but a significant part of our presentation is around the fact that the access issue needs to be sorted out. When that is combined with the lack of execution by the Government, the issues are running in tandem.
I would like to add to my original proposal to invite the regulator before the committee. Could we also invite the Minister or somebody else on behalf of the Government to address the appalling issues raised, which border on the scandalous, with services lying idle while there is an outcry for them?
Clearly, this is the responsibility of a number of Ministers and agencies. We will examine this and we will put it down as part of our work programme. I thank Mr. Lupton, Mr. Keogh and Mr. Quinn for their enlightening contributions. It has given us much food for thought.