JOINT COMMITTEE ON COMMUNICATIONS, NATURAL RESOURCES AND AGRICULTURE debate -
Tuesday, 31 Jan 2012

Priority Issues: Discussion with Commission for Communications Regulation

Chairman

I welcome the representatives of the Commission for Communications Regulation: Mr. Alex Chisholm, the chairperson; and Mr. Kevin O'Brien, a commissioner. The committee would like them to outline the current work priorities for the Commission for Communications Regulation and give an overview of its operations.

By virtue of section 17(2)(l) of the Defamation Act 2009, you are protected by absolute privilege in respect of the evidence you are to give this committee. If you are directed by the committee to cease giving evidence in relation to a particular matter and you continue to so do, you are entitled thereafter only to a qualified privilege in respect of your evidence. You are directed that only evidence connected with the subject matter of these proceedings is to be given and you are asked to respect the parliamentary practice to the effect that, where possible, you should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable. Members are reminded of a long-standing parliamentary practice to the effect that Members should not comment on, criticise or make charges against a person outside the House, or any official by name in such a way as to make him or her identifiable.

I ask members and those in the public Gallery to turn off their mobile phones. I invite Mr. Chisholm to make his opening statement.

Mr. Alex Chisholm

We welcome the opportunity to give an overview of our work and the sector. As this is our first appearance before this committee, we wish the committee well in its work. I assure the members of our assistance and our commitment to giving any information we can to help them in their work.

The Commission for Communications Regulation was set up 14 years ago, originally as the Office of the Telecommunications Regulator and renamed the Commission for Communications Regulation in 2002. It is headed by a commission. There are normally three commissioners, including me as the current chairperson, and Mr. Kevin O'Brien who is sitting on my right and who joined us last November. Some members of the committee will recall Mr. Mike Byrne who stepped down as commissioner at the end of last year. In addition to the commissioners we have a number of highly trained and experienced staff with a very high standard of qualification who are a very committed and hard-working group of professionals.

The way we regulate is defined very clearly in Irish and European law. European laws for telecommunications were recently updated and transposed into Irish law in July 2011. Postal legislation was enacted in August 2011. So in both cases we have quite up-to-date legislation. The Acts define our role in great detail and I will give a brief overview. Our key tasks are to: promote competition, consumer choice and interests of users; facilitate market development, innovation and the efficient use of spectrum; and ensure the maintenance of universal service in telecommunications and post is preserved. Several new responsibilities have been added in the past two years including emergency call answering services, the .ie domain name registry for the Internet and premium rate services regulations. I ask Mr. O'Brien to give a brief overview of the market as we see it today and then I will return to the work programme.

Mr. Kevin O’Brien

The next slide refers to the Irish communications market today and it gives several facts and figures. I will outline three general observations in respect of this slide. The first relates to the ubiquitous nature of communications services in our daily lives including the Internet, mobile phones and the postal service. The second relates to the dynamic nature of the sector. Some 15 or 16 years ago there was only one operator in telecommunications. Now, we have more than 50. The technology changes rapidly. This is probably best demonstrated by the equipment we use today such as smartphones and tablets. The third observation in respect of the market overview is the economic importance of the sectors. There is a turnover of approximately €5 billion, annual investment of approximately €500 million and approximately 25,000 people are employed in the communications sectors. Communications infrastructure is important infrastructure underpinning foreign direct investment in Ireland.

The next slide relates to broadband. The intention is to provide some graphs which give a sense of broadband characteristics in Ireland. The top left of the slide shows the total number of Internet subscriptions, in excess of 1.6 million. The key story is that it is now all broadband. The level of narrow band or old dial-up technology is declining all the time and most people who have the Internet use broadband.

The second graph covers broadband subscriptions by platform. The story here relates to the many ways of getting broadband in Ireland including cable and digital subscriber line, DSL, probably the most familiar way of accessing the Internet across the copper wire. The graph also includes fixed wireless access, FWA. This is a wireless platform for availing of broadband. There is a range of platforms including fixed, mobile and wireless. The graph on the bottom left shows household broadband penetration in Ireland. This shows a story of catch-up. In recent years, the household penetration rate has converged close to the European average and this is demonstrated in the graph. The final graph on the bottom right gives an indication of broadband price in Ireland. The prices in Ireland, highlighted in red, are slightly above the EU average but below some other large member states such as France and the United Kingdom.

The next slide covers ComReg strategy. The purpose of it is to give the committee an overview of ComReg's approach to strategy. In summary, we have statutory duties relating to the production of strategy statements. We produce these for the electronic communications sector and in respect of spectrum and the postal sector.

Mr. Alex Chisholm

As I remarked at the outset there are three main pillars to ComReg's work: competition, innovation and consumers. I will discuss each pillar briefly. The main point to highlight on the competition side is that the market as a whole, whether fixed or wireless, is becoming considerably more competitive. An independent survey conducted in November towards the end of last year found that 74% of companies stated that the market had become more competitive during the past year.

As Mr. O'Brien remarked there is a great deal of competition in the broadband sector among the various technologies, including fixed and wireless. For several years, ComReg has been pursuing the unbundling of local loops and the number of such lines has increased by 60% in the past year. We must ensure that the companies subject to regulation because of their significant market power provide services to retail operators on an equivalent and non-discriminatory basis and in this regard we placed key performance indicators on the wholesale business of Eircom to ensure it would do this. We also made an intervention in the mobile termination rates market. This has had the effect overall and on average of a 50% reduction in the 18 months to the end of last year, with mobile termination rates going from approximately 8 cent to 4 cent, roughly the European average. Another point relating to competition is that the mobile market has four main players with infrastructure and three so-called virtual network operators. We are heavily engaged in the development of a release of new spectrum which, we believe, has the potential to further augment competition. Without going into the details of our work on the market analysis side, a large part of our responsibility is to ensure that the way regulation applies is appropriate to the market context as it is now in order that it can evolve.

The next slide refers to innovation and investment. We are obliged to undertake a great deal of work as the spectrum manager. I highlight in particular the work we are doing in respect of the 900 MHz and 1,800 MHz spectrum. This is the spectrum used at the moment for GSM services, that is, the ordinary typical mobile phone services that people use. The licences for these services are due to expire shortly in two cases and the third case will expire in 2015. We must determine what to do with these in future in a new allocation process. In addition, we must consider the so-called 800 MHz digital dividend. It is known as the digital dividend because digital broadcasting is a great deal more efficient than analogue broadcasting and it releases some spectrum to us which we can, in turn, make available to the market. This spectrum, including 800 MHz, 900 MHz and 1,800 MHz is critical because it is situated at the so-called sweet spot in the radio spectrum where there is a happy combination of wide coverage and reasonable capacity. It is a very valuable and useful spectrum which will be important for the development of wireless services in future. Among other things, it will enable the further development of mobile broadband services. We believe when the spectrum is out in the market it will be positive for competition and service quality and innovation. As well as trying to release spectrum in a way that encourages innovation and competition in the interests of users, we try to use the spectrum we have here. It is relatively plentiful in Ireland because it is an island and because we do not use much of it for defence purposes unlike some of our neighbours. We try to encourage people to do tests and trials here and some useful and nationally important trials took place here last year on so-called 4G services and smart metering.

Issues relating to consumers are often the starting point for Members since constituents bring issues to their attention. ComReg has had several iterations and one issue brought to its attention as a previous body related to the quality of the basic universal telephone service provided at the moment by Eircom under its designation as the universal service provider. I am pleased to report that we have made considerable progress in improving the quality of this basic service following an initial intervention made in 2008 and reinforced in 2010 with a new regime, including a €10 million bond from Eircom. With such encouragement, pressure and incentives, Eircom has greatly improved the quality of the basic universal service. As an indicator of the impact of that improvement during this three year period, there has been 12,500 faster installations than there would have been otherwise, 80,000 faster repairs and 30,000 fewer line faults. That is also reflected in the significant drop in the number of consumer issues and complaints raised with us about the basic telephone service. Therefore, it has been quite a successful programme to date. On the postal side, we believe there is still a considerable gap and that there is need for improvement in An Post. It is still well short of the 94% target for next day delivery and we will need to follow that up with a view to bringing about a further improvement.

Responsibility for premium rate services was transferred to us some 18 months ago. This significant responsibility has given rise to a number of consumer concerns in the past and some of the issues continue. We have taken the attitude that we need to ensure that consumers are fully informed and aware of the way the services operate, how they are protected in an appropriate way and of the regulation of the industry by way of a code. We have been quite proactive in that space and have launched a major new website, PhoneSmart.ie, which has had some 25,000 users in the past year. We also conducted an advertising campaign to promote the use of the STOP service so that anyone receiving a mobile subscription service they do not want need only text the word “STOP” to a short code number to cancel the service. We have also developed a new code which we believe will give an enhanced level of protection in that area.

I will highlight two other points. We have found it necessary to take a number of compliance actions with operators over the past year or so. Some of those have been in the consumer area, in particular with regard to ensuring that consumers are properly notified about contract changes and that their rights with regard to billing are upheld. Action has also been taken in the area of roaming. Along with these high profile interactions with operators we constantly work closely with individual consumers to resolve their queries and issue. In the past year we dealt with 33,000 such queries.

I would like to make some remarks on the performance of ComReg, particularly in the straitened times we face in the public sector. Our watchwords in ComReg are "continuous improvement". This is necessary because, like other public agencies, we are faced with considerable staffing constraints, including the employment control framework, yet our functions and responsibilities have increased. We have had to prioritise to remain effective. Outsourcing has played a part in this, but so have changes in internal processes. We have been able to use innovations such as e-licensing to try to reduce the level of work for our internal staff and for external users of the licensing system. Licensing is a large volume activity for us. We issued 16,000 licences in 2011, of which almost 4,000 were new ones. A further indication of the amount of work we have to do is the significant number, 183, of public documents we issued last year, some of which were very weighty ones. The volume of visits to our various websites also increased to more than 500,000.

Besides looking at effectiveness, we also see it as important policy to be efficient in our work. One indicator of our efficiency would be the gap between our income and expenditure in a particular year and what happens to that expenditure. Our expenditure has fallen and we have managed to reduce total costs by 8% since 2008. Some of this has come about through a reduction in staff costs. Like other public bodies, we have been affected by the pension levy and the reductions made in general salary levels. We have also been able to reduce our consultancy costs and to bring efficiency to outsourcing and our control of overheads. Through this time, the industry levy of 0.2% has remained unchanged - the lowest in the European Union. As spectrum manager, we have a considerable surplus between income and expenditure in our work and since our inception some €370 million have been returned to the Exchequer.

We have been able to integrate the body formerly responsible for premium rate services, RegTel, with ComReg. Therefore, we have some experience of the widely touted proposal to merge public bodies. Our successful integration was carried out 18 months ago. We constantly try to improve our work and to maintain international standards. We listen to feedback from our audit committee and from expert groups and are also subject to significant peer review and benchmarking at European level. An example of this review is the European Competitive Telecommunications Association's, ECTA's, regulatory scoreboard. The most recent evaluation on this scorecard put Ireland in sixth place out of 22.

Accountability is an important matter for this committee and it is also important to ComReg. As an independent regulator established under statute, ComReg is responsible to the Oireachtas, through this committee and generally. We try to work with the committee and with individual Members. We are also subject to a great deal of legal scrutiny. In the telecommunications domain, as well as judicial review, we are also liable to a possible "merit review" within a month of the judicial review. This is a particular feature of electronic communications under European legislation. Therefore, there is a high level of legal scrutiny. We are obliged to consult exhaustively on our work and we do so and there is a great deal of public consultation before we reach our final decisions. We publish a strategy and output statement on our work, the detailed action plan and the financial forecast and try to be as transparent as possible to assist the public and stakeholders.

The electronic communications markets that we regulate are becoming increasingly competitive and now offer greater choice and value for users. Broadband, which has been an area of particular interest, has approximately 1.6 million subscribers and is taken by approximately two-thirds of households. While we are now approximately at the European average, we recognise that further progress is required, particularly for the higher speed services. We are, therefore, working with the Government and the private sector to promote next generation broadband, which will deliver very high speed services. We are heavily engaged with preparing for the multi-band spectrum auction which we see as offering high potential. We are also very much stuck into our new responsibilities for the postal market, particularly universal service and quality of service in that market. Overall, our goal is to ensure the development of a modern and efficient communications sector that contributes fully to recovery and growth. We will be delighted to answer questions or address any comments committee members have.

Deputy Éamon Ó Cuív

I welcome Mr. Chisholm and Mr. O'Brien. We are discussing the "highway" of both the present and the future and it is important we have a comprehensive debate on the subject. I am sure today will not be the last day we will deal with this.

I was interested to hear Mr. Chisholm talk in his presentation about competition, consumer choice and the interest of the users. I was particularly interested in the order in which he put these because I often get the impression that the European Union is more concerned about competition than the end users. The interest of the users should dominate and I think competition is an over-rated god that caused chaos in this country with the banks and which does not necessarily deliver uniformly good services. Our objective must be - I wonder what Mr. Chisholm's views on this are - that no matter where we live in the State, we will have uniformly good access to high quality telecommunications and postal services. Location should not create a major differentiation to the quality of the service. People are more mobile now and even those working in large companies move around the country. They want recreation at weekends, but want to be able to contact the west coast of America or the Asian markets without needing to be in the office to do so.

Making services universal is not just about the person who lives in the rural area. It is about selling our country as a place where anyone can do any business on high quality broadband anywhere in this State. That leads to a big issue and I would like the witnesses to tell me how they deal with it. If this is done on a competition only basis, certain parts of the country will always be miles ahead of the rest. There is plenty of competition around south Dublin, where we see Eircom putting fibre into houses to compete with UPC. As was shown in the presentation, 726,000 people are dependent on DSL. There are huge issues with contention and so on when everyone switches on the Internet on a Sunday and they cannot get any business done on it.

What do the witnesses define as a universal service in telecoms? Perhaps the law still states that it is a telephone line with a bit of copper. If that is the case, do the witnesses believe that we should define it as 30 megabytes, jump into the modern world and stop thinking that a universal service is a telephone line which we can speak down? I would be interested to hear the witnesses' views on that and on where they think we should set the bar as legislators.

Mr. Chisholm spoke about being technology driven. From my experience we are always told that these things are technology neutral in the bidding processes, but not all technologies provide the same service. It is fine if someone is in an area and has a choice of a satellite, a radio and the fibre connected to his or her building and so on, but the reality is that there are many choices in some areas of the country while the companies decide the choice of technology in other areas of the country. We auction out the system and we allow the technology decide the service rather than deciding that we should have a choice of technologies. I am not against a choice of technologies as long as everyone in the State has the same access to the choice. At the moment, people have a choice of technologies in some areas, but in other areas only one technology came out of a bid and people have to take that technology or they get nothing.

Mr. Chisholm spoke about an increased value on mobile fixed bills. What about the idea that mobile providers have to advise on the best package? It is fair to say that someone who is really into this mobile stuff will look at all the packages and will get the best package. People who might be a little bit more innocent about telecommunications - fixed or mobile - will take the package they have, even if they are being robbed because it is not the best package. They will not query it. Should there be an onus on the companies to advise on the best package? This leads to the whole issue of bill shock. We have seen examples of bill shock in the newspapers and I am sure the witnesses know more about it than I do. It happens when someone gets an absolutely outrageous bill. Should it be mandatory that everyone puts a limit on their bill? The limit can be set as high as the consumer wants, but when the limit is hit, at least he or she will be warned or his or her phone will switch off until it is reactivated, and the consumer does not then get a massive bill.

The next issue is investment in next generation broadband. I would be very interested to get Mr. Chisolm's definition of when we will get next generation broadband and what it will be. I think DSL is an excuse for broadband, like some of the other radio technologies. It is not broadband in the modern concept and it is not what people want. What is ComReg's target bandwidth, speed and specification for broadband? What would the witnesses define as being a universally acceptable level of broadband? Mr. Chisholm said ComReg will be publishing new strategies for 2012 to 2014 and I would be interested in that.

ComReg will be auctioning the 800 MHz, 900 MHz and 1800 MHz spectrum. I welcome the development of Test & Trial Ireland. I know there is good employment potential there and it is important that we keep it going. However, I have been given figures which show that ComReg is not going for universal coverage. I have been asking the Minister to order ComReg to cover the whole State effectively with this. I think we can get 99% mobile coverage. I understand that ComReg is far below this and that its population targets are far lower. When we take the area that is covered, the percentage of the country covered is far lower again. All the areas that are in any way sparsely populated, and we have a very dispersed population, will not be guaranteed cover. There is a wing and a prayer attitude to coverage.

The MMDS licence is expiring soon and I understand that 60,000 people are dependent on that service. Is it intended to renew that licence or will 60,000 people find themselves without a service? How does the regulation of UPC compare with the other platforms? I understand that the regulation of UPC is a lot less than with other platforms, and that there is a slightly uneven playing pitch. Perhaps the witnesses could inform the committee of the situation in that regard.

There was not much mention of postal services in the presentation. We passed the Communications Regulation (Postal Services) Act 2011 and some of us were very concerned about cherry picking. What will happen to ensure there is no cherry picking and that the universal service provider is not left with the more dispersed parts of the country to provide the service? No matter what the Act states, I do not see private companies ever paying An Post to provide the universal service. The argument would then be that services have to be cut in rural areas. What steps has ComReg taken to ensure that any newcomers to the market adhere to the same standards as An Post? It is fair to say that An Post has provided a very reliable service throughout the country and is very answerable.

I understand that ComReg carries out quality of service surveys but does not tell the companies where they fall down. It informs the companies if they have fallen below a certain level but it does not tell them where that is happening. That seems to me to be a waste of effort. If the companies knew where they fell down, they might be able to pick themselves up again and to rectify the issues. However, I understand that ComReg does not do this.

I again welcome the witnesses and I look forward to the debate.

Deputy Martin Ferris

I thank both witnesses for their presentations today. Like everyone else, I share the objectives of good access for all people in the State. We need high quality broadband right across the State, with equality of choice for those participating in it.

I have very few questions because many of them have been asked by Deputy Ó Cuív. One question has come to my constituency office about service providers charging for voicemail. I am not sure if the witnesses are aware of that, but certainly one service provider is doing this.

There are two measurement systems used to check the quality of service provided by An Post. One measurement is done by the regulator and the other is done by PricewaterhouseCoopers for An Post itself. I am told that there has often been quite a big difference between the results of both systems. Does the regulator think it is fair that An Post has no input or feedback into the regulator's methods, but is still bound by the results? Given that there are two measurement systems, ComReg is effectively duplicating the system of measurement carried out by An Post. Would it not make more sense for ComReg and An Post to agree a single, independent quality of service measurement system? I understand single systems are in place in other European jurisdictions. Does ComReg have plans to measure the quality of service of An Post's competitors? I understand that is not the case.

Deputy Thomas Pringle

I thank Mr. Chisholm and Mr. O'Brien for their presentation. On next generation broadband, what is ComReg's role in the group established by the Minister to examine this issue? Will it have an input into the type of broadband that will be rolled out, for example, on the decision as to whether it will be fibre or a combination of broadband types? In my view, a fibre solution should be selected. Does ComReg have a view on whether the solution should be a combination of fibre and mobile broadband, with only the latter being made available in rural areas?

The Samaritans have been allocated a 116 number which people in distress may call. What role does ComReg have in the negotiations on the roll-out of the new number, especially in respect of the costs the Samaritans will incur in providing the service? Will ComReg provide a solution which involves participation and a contribution from telecommunications operators with a view to minimising the burden placed on the Samaritans?

Senator Pat O’Neill

I thank Mr. Chisholm and Mr. O'Brien for their presentation and acknowledge the role ComReg has played in delivering competition in an economic climate in which businesses must be competitive. The tariffs of mobile telephone operators are changing constantly. I would love to show our guests bills I received for my first mobile telephone ten or 15 years ago and compare the charges with the prices available now. Mobile telephone companies do not inform customers of reductions in tariffs unless the customer calls to query them. I was on a tariff for one year and when I telephoned six months into the contract I was informed the tariff had been reduced by 50%. If I had telephoned one month after taking up the tariff, I would probably have benefited from the reduction. Is it possible for ComReg to introduce a regulation requiring operators to automatically notify customers of changes in tariffs?

Despite the introduction of EU regulations on roaming costs, people who leave the State to do business abroad and business people who come here to do business incur very high roaming charges.

On scam e-mails and texts, people innocently respond to certain texts or e-mails only to find that money is being removed from their telephone accounts or, in the case of pay as you go customers, from their credit. Can this practice be regulated because people find it difficult to leave such contracts and there is insufficient information available on how to unsubscribe from such services?

A large number of operators are involved in the fixed line telephone business. Can anything be done about line rental charges, which are a major cost for consumers? In the digital age, fixed lines may no longer be needed. While I do not know how many people use their home telephones, I estimate the majority of lines are used solely to receive broadband services because most people do their business on mobile telephones.

Deputy Noel Harrington

I thank our guests for their interesting presentation. Competition has driven recent advances in the telephone market. In a previous existence I worked on a switchboard. Under the old switchboard system, each town may have had four outward lines which meant six callers would have to wait if ten calls were being made. Technology has made unbelievable advances in a relatively short period.

ComReg wears a number of hats. It is tasked with regulating the telecommunications industry and is also involved in competition and innovation. While these functions are prescribed in the relevant Acts, I am interested to learn our guests' views on potential conflicts between competition and regulation, on the one hand, and innovation on the other. We often hear about conflicts in the banking industry. It would be interesting to hear how ComReg separates its roles in the area of regulation and competition and attracting new operators to the telecommunications industry.

The graphs provided show high levels of access to standard or basic broadband services among consumers. How does Ireland compare with other European countries or globally in terms of access to broadband services with a bandwidth of at least 100 mb per second? It would be useful to have independent figures on this issue.

We are frequently given figures suggesting mobile telephone coverage in this country is almost universal. However, the statistics provided by the telecommunications companies refer to population rather than geographical area covered. For example, while 95% of the population may have access to mobile telephone services, it may also be the case that only 70% of the territory of the State is covered by the service. It reflects poorly on mobile telephone operators when they publish figures of this nature. While they are not misleading, they do not give a full picture of the service they are providing.

I echo the views expressed by previous speakers on An Post. I should declare again that I worked as a postmaster. My superiors were in touch with me constantly about the next day quota I had to reach. How are these figures measured? Does ComReg measure them? Is this done by sending a number of items of post and measuring how long it takes to process them? I am keen to find out how this is done.

One of my bugbears is the power of operators to charge for both local and national calls in a country of this size. For example, my local area has a number of STD or area codes but when one makes a call to the administrative capital, Cork city, it is classified as a national rather than local call. I cannot understand how operators are able to continue to make a distinction between local and national calls. In other countries, all domestic calls are charged at one rate. It defies logic to distinguish between local and national calls in such a small country.

I refer to a minor issue which has been highlighted recently. ComReg has done some work on personalised radio beacons in the context of maritime safety. A problem has arisen in coastal communities because we have been unable to get the Department to sanction these beacons or regulate this area. The RNLI in the United Kingdom makes effective use of this system and a number of lives have been saved as a result. Unfortunately, we are lagging behind in this area. Perhaps some work could be done to advance this agenda.

In view of the recent inquiry into telephone hacking in the United Kingdom - a practice which may also occur here - has ComReg received complaints from consumers who believe their accounts have been compromised? What Mr. Chisholm said about selling or leasing some of the spectrum for testing makes sense because we do not have as big a military industry as other countries. Will Mr. Chisholm give us some idea of how valuable that is for this country? Are we fully utilising it? How does it work? I think he mentioned nine licences. What kinds of funds does that bring into the country?

Will Mr. Chisholm explain his role in capping prices for retail data roaming, in particular in a European context? Where have there been breaches of it? How do we compete in a European context?

Chairman

ComReg works under communications legislation and the postal service legislation enacted last year. It has the power to regulate. What are its powers of sanction in the event of somebody being in breach of regulation? Mr. Chisholm mentioned the recent issue about e-billing, and I had the occasion to contact ComReg. If an operator refuses to comply with its licence, or could potentially be in breach of its licence, what power of sanction has ComReg over that operator?

Will Mr. Chisholm clarify whether ComReg is solely funded by that 2% levy or does it have access to other funding? Does that €371 million refunded to the State by way of a dividend date from 1997? The figure for 2010-11 is approximately €32 million. I raise that in the context of the potential fear that the larger the operator, the larger the levy ComReg draws down and the more reticent or the less likely a heavy-handed sanction would be applied. It is a valid question.

I am glad Deputy Pringle raised the question of the Samaritans but the other issue is roaming in the Border areas. That is a big issue in Deputy Pringle's constituency and in other constituencies along the Border where people roam inadvertently. It is similar to Deputy Harrington's point. I live in an 0404 area but the area one mile or 2 km from me is 01. It is considered a local call once the first digits are 2818. Is there any way to ensure people who inadvertently roam along Border areas, in particular, are not charged for it?

We hear much about broadband speeds but we do not seem to hear so much about broadband width. These are the phrases used. I am told that we do not need the fastest broadband in the world. We need adequate speed but, more important, we need adequate capacity, by way of width, so that it can carry a lot of communications at a time as opposed to less at a higher speed. When ComReg holds the auctions, will that be considered as part of the auction tender process?

Mr. Alex Chisholm

I thank the Chairman. We will try to answer as many of those questions as possible. I am sure if we miss one or two, members will be quick to point it out to ensure we give satisfactory answers. I will have a go at answering the questions but if I miss some, I will ask Mr. O'Brien to step in on one or two points. I will try to take the questions in the order they arose, if that is all right.

Deputy Ó Cuív used the phrase "highways of the future" which we might adopt ourselves because we agree with that and see the networks as incredibly important pieces of infrastructure for the nation, for economic development and recovery and for the way in which people lead their lives today. We also agree that while competition can help to deliver services to users and has been important in that regard, it has its limits and those limits can be reached and are defined by the universal service. It is very important to ensure that where there is not the scope for competition to satisfy users' needs, there is still a universal service both in electronic communications and post.

As to what the standard to be expected of that universal service, that is something which is very much up for review at the moment. I am sure the Deputy is aware that there is a very active debate at European level about the definition of the "universal service" and whether it should include broadband, in particular, and whether the current definition, which seems to tie it very closely to availability at a fixed location, should be updated to include alternative technologies more readily. Ireland, like every other member state, feeds into that process and ComReg is part of that.

In addition, we must decide relatively soon - 1 July this year - on how to designate the universal service as the current designation period expires at the end of June. Within the next few weeks, we will issue a consultation paper on that. Hopefully, that will air some of those key issues the Deputy raised, in particular about the extent to which the universal service needs to evolve over time.

The second point raised by the Deputy was in regard to mobile providers not always giving the best package available to consumers. This point was also raised by Senator O'Neill. It is certainly the case that mobile providers provide a very large range of services and packages. If one was to look at any of the operators' sites, one would see there is a great number of different packages available. I accept there is the possibility of some confusion among ordinary consumers faced with that level of complexity. Obviously, operators have responsibilities to give a clear picture of their services and their pricing to their customers and potential customers but to try to provide an across industry point of comparison, which is rigorous and independent-----

Deputy Éamon Ó Cuív

That was not the point. I am not comparing companies but the packages provided by one company. I could be on package A, which means my bill is huge, but I may not realise that if I moved to package D, I would save a lot of money. When I got a telephone, I ran up a big bill but the particular company contacted me because I had a really big bill for the package I was on. My understanding is that it did not automatically have to contact me. I am not talking about inter-company comparisons but comparing packages within a company.

Senator Pat O’Neill

That was the same point I was making. The company does not let one know. There is no obligation. If one did not contact it, one would still be on the same package five years later.

Mr. Alex Chisholm

One issue there is that people's pattern of usage changes over time, whether because of changes in one's circumstances or being on holiday. All these things can make a difference but from our point of view, we encourage all the companies to provide the best possible information. It is the case that companies will contact consumers sometimes when they observe differences in their pattern of usage. We have regular experience of that reported to us - of people saying they should have switched to an alternative package.

From our point of view, we believe it is very important that people can get the best possible package. I do not know if members have seen our website. The website, callcosts.ie, is used by 200,000 consumers a year to make inquiries about the best package. Consumers can input usage pattern, the number of calls they make, whether they need data and whether there is a difference between weekdays and weekends. From that, the website provides the most suitable package. We recommend that to all consumers and to the members’ constituents. It is a free service and a reliable tool to find the best available package for the usage profile.

At European level there is protection against so-called bill shock. It occurs particularly when people are roaming outside their country and within Europe. They run up large bills from phone usage or, more particularly, data usage. The current European roaming regulation provides protection on retail voice services. The view of ComReg is that it should be extended this summer, when the review at European level is due to conclude, to the protection of data services. A smartphone may be updating overnight, people may be accessing services to which they forgot they subscribe to or particular applications are running and people run up large bills. They need protection against bill shock.

Deputy Éamon Ó Cuív

We could do that unilaterally and see if Europe follows.

Mr. Alex Chisholm

Regarding premium rate services, where people have experienced bill shock to issues in a domestic context, we have proposed that regulatory reminder type approach so that people are aware they have subscribed, have spent a certain amount of money and are alerted so they have the opportunity to stop spending money.

Chairman

Will Mr. Chisholm clarify whether that needs a change of regulation? Does the current regulatory framework allow ComReg to enforce this matter? This comes back to my question about sanction and enforcement.

Mr. Alex Chisholm

We are satisfied we have the powers we need with regard to premium rate services. It is included in the code at the moment. There are a number of enhanced levels of protection, which will be included in the new code due to be published shortly.

I will come back to the question of sanctions. The Deputy asked about next generation broadband. It is an evolution, not a moment in time and next generation broadband is already around us. Cable companies such as UPC offer services up to 100 MB and even standard packages seem to be 10 MB, 20 MB or 30 MB. They are in the area commonly described as next generation broadband. The availability of those is approximately 50% of the country.

Deputy Éamon Ó Cuív

Is that 50% of the population or by geography?

Mr. Alex Chisholm

I will come back to the question. Regarding other next generation services, I take a different opinion to the Deputy on DSL, the digital subscriber line services on copper. For 20 years, people have been saying that copper will die, that it is outdated and cannot cope with the level of use people want. It is remarkable how much they have been able to improve the capacity of copper lines throughout that period and that process will continue. Using the latest technology, we can get speeds of 25 MB or 30 MB, which is more than enough for almost any of the applications currently available on the market. Copper will be an important part of the next generation network, as well as fibre and cable. We also see a large role for wireless services, particularly in Ireland with our particular geography and distribution of population.

Regarding what the speeds should be and how we should get there, it is important to note that the speeds available over the past year are such that 20% of all subscriptions are to services offering 10 MB. This is a transformation compared to the situation two years ago. We are making serious inroads into the high-speed highways of the future but we have further to go. How far we should go is defined in two separate ways. This is partly done by the European level targets, which are for Europe as a whole. The first is that everyone will have access to broadband by 2013. According to the recent statement by the Minister in the House, Ireland will be well ahead of European deadline. The second is that, by 2020, 50% of subscriptions should be to a 200 MB service and there should be availability to 30 MB services across the country. The Minister and Deputy Harrington referred to the work of the next generation broadband task force. This is examining the targets to see the extent to which they are appropriate in the Irish context and the steps that can be taken to facilitate the development. ComReg is an observer on the group, not a member. It is the Minister's group and has a number of industry participants. We are involved indirectly and we look forward to seeing the results and taking part in any implementation that follows.

At the moment, the levels of coverage available are a matter of both regulation and market demand. In regulation of 2G services, the basic GSM services, mainly voice services that have been present since 1996, the regulatory requirements are that coverage must be up to 99%, although different licences vary. Overall, the level specified tends to be towards the top of the European range. 3G services were licensed more recently and the specified level varied. It applies to both voice and data, which is more expensive to provide on national coverage, and varies between 83% and 90%. This is quite high by European standards.

Regarding our latest proposals on spectrum that will apply between 900 MHz and 1800 MHz, the approach taken is not to set population coverage targets, which we think will continue to be very high, but to set a protection against cherry picking by potential new entrants. That level of protection has been set at 70%. That means all operators must duplicate their infrastructure across 70% population coverage. We must have regard to the cost effectiveness of increasing the specified level of duplication over the proposed level.

As well as regulatory requirements, there is also market demand. It is noticeable that all operators exceeded the regulatory requirements for 2G and 3G and that policy speaks to market demand and the consumer's interest in access to the mobile services across the country, whether for voice or data. Deputies Ó Cuív and Ferris made reference to this point. The demand for these services has caused operators to go above the regulatory requirements. We see the process continuing and the need to satisfy consumer demand and to be competitive with other providers will drive up the level of coverage.

There was a question on MMDS services, which are used for television services. These are held by UPC and the licences are valid until 2014 in one case and 2012 in the other. We will shortly confirm the situation with regard to licences terminating in 2012 and will also hold a further consultation with regard to licences after 2014. We will take account of the interests of users as well as the potential alternative users in that work.

On the postal side, the Deputy expressed some concern about potential cherry picking and the future of the universal service. The universal service, according to the Postal Act, has been attached to An Post which has been designated for a 12 year period. ComReg has a number of responsibilities to make sure the universal service is upheld and remains sustainable. We will perform our role as efficiently as we possibly can.

On a point of information, the Deputy asked about the quality of service tests for telecommunications, particularly mobile coverage. We share the results with companies and how they have fallen down. It is a very important part of the feedback and companies attach great importance to it. When we are doing the testing process we look very carefully at what issues and concerns have been logged by our call centre. We use that to inform the particular drive tests we do. We test routes where there have been reported areas of low coverage. We would be pleased to look into any information Deputies have which they can share with us about coverage issues and feed it into the process.

I will turn to some of the points and questions made by Deputy Ferris. We share the Deputy's view about the need for very high quality broadband. On the issue of service providers charging for voicemail services, very often those services are provided free. If there are particular cases where people may have been incorrectly charged or are not well informed about charges, we would be grateful if members could share them with us. If they can send on the details we will look at them.

On postal monitoring, the requirement under the legislation is that we have an independent postal quality of service monitor. We are not able to do that, therefore it has to be done by an independent and suitably qualified research company. It has been done very effectively over a number of years. It has to meet a specified European standard, the CEN standard, and also be subject to an independent audit, which it is. Again, this is done by a qualified person to make sure the process of testing the quality of the mail is done to the highest possible standard and is robust and accurate. We have no role in any separate monitoring that An Post may choose to do and it is not a requirement on our part that it does separate monitoring. Quality of service monitoring applies to the universal service provider which, in legislation, is An Post for the next 12 years.

Some questions were raised by Deputy Pringle. I tried to answer the question on our role in regard to the next generation broadband task force. He also referred to 116 numbers, particularly in regard to the Samaritans. Our role has been to reserve those numbers and then license them to particular operations. I am happy to say we have been able to do that. We have also been able to facilitate discussions with operators about what charges would be applicable and ensure they fully understand the issues that might arise. However, we are not in a position to order operators to give reduced charges. It is a matter for companies but we have tried to facilitate them. I am happy to say the system is operational.

I will turn to the points raised by Senator O'Neill. I tried to address the point on mobile bills. On average, mobile bills have fallen for each of the past five years, as have average household bills. The usual industry measure is average revenue per user, which has fallen by 15% year on year. There is no question that people are getting more service for less money. It requires some shopping around and I appreciate that. We try to illustrate that in our call cost service.

I have spoken about our support for a fair extension of the protections against roaming costs. In regard to people subscribing to services which they no longer want, we have had a campaign which has been reasonably effective from an awareness point of view. People can simply text "Stop" to their mobile service provider. Our market research shows the understanding of that is reasonably good but we need to continue to send the message to those who are not aware of the process. We will continue to do that.

Senator Pat O’Neill

Mr. Chisholm said a person can text "Stop" to a service provider. However, when some text messages and e-mails are opened people are charged. They may not know about charges until they check the amount of credit on their phone or get their next bill. Companies are gaining until people realise they are being scammed. Can any warning system be put in place?

Mr. Alex Chisholm

I will expand on that point and I thank the Senator for giving me the option sheet to do so. We agree it is a matter of concern. A very large portion of the complaints we have had about premium rate services have been from people who said they did not subscribe to the service. Due to the nature of the way in which people might use the Internet, such as through mobile devices, they can click a link which might activate a service. People will say they did not realise what the consequence was and they are now being charged.

It is only when people see their phone credit decreasing they become aware it is an issue. We are concerned about that. If the proposals for a new code of practice, which is due to be finalised shortly following the European notification process, are confirmed it will provide a double opt in. In the first instance, somebody would indicate he or she wishes to avail of a service by clicking on a link or sending a text message. The company would then be obliged to revert to the customer and ask him or her to confirm that he or she wants the service. There will also be certain terms about what the service will cost and what people get in exchange.

That is very important, for the reasons that Senator alluded to. Otherwise one cannot be quite sure a person has subscribed. People might have unknowingly subscribed or say afterwards that they were not aware of it. There could be a dispute as to whether he or she subscribed. It is an important protection.

Senator Pat O’Neill

I welcome that.

Mr. Alex Chisholm

The Senator also referred to line rental. It is at a level which has not changed for a number of years. It is something which some consumers wish to try to avoid and one way in which they do that is by not having a fixed telephone service. One does not pay for line rental if one subscribes to a cable company or does not have a fixed connection to a mobile service. I understand about 30% of households have mobile services only and do not have a fixed line. The two factors may be related. From our point of view, the way we regulate that has to reflect the cost. It is a cost-oriented price.

Deputy Harrington made a number of points and I will try to deal with them as best I can. He quite rightly said sometimes there can be a trade-off between competition and regulation. We accept that and it comes into our work sometimes. One example he mentioned was new entrants. If there are very high requirements on new entrants we may not get any which is poor for competition, a factor we have to take into account.

We are trying to provide sustainable competition. We have to make sure there is an economic space for operators in the market, particularly those competing against well-entrenched incumbent providers. It is a feature of the wholesale regulation and pricing systems we put in place.

The Deputy asked about the availability of the 100 MG service. Currently, it is largely available in cable areas which covers 50% of the country. Like him, we see it as positive overall for economic development. However, as the expression states, "You can lead a horse to water but you can't make it drink" and we note the take up of very fast services is not very high. Consumers do not necessarily value additional speeds very highly, although that may change over time.

The Deputy raised an interesting issue about the distinction between local and national calls. That is still the norm across the EU. However, we believe that with the move towards a complete next-generation broadband network based entirely on a fibre core, it is likely we will see a significant evolution in the way voice services are priced. That may cause a movement towards national or regional pricing away from the very strict local-national dichotomy. We agree there are likely to be changes in this regard and that they will probably be positive.

We have not received a significant number of complaints about improper access to voicemail services. As a precautionary measure, however, we provided additional guidance to consumers when there was a great fuss in the United Kingdom over the protections that could be taken. It does not appear to have been a significant issue in Ireland for ourselves or operators. I am happy to say this but, of course, we watch this space with interest.

A very important point was made on maritime safety and the registration of beacons. Could I be given a note or be spoken to afterwards to ensure we capture the information correctly? We will follow up as necessary because it is obviously an important matter.

On the value of defence spectrum, the Defence Forces are not excessive or greedy guzzlers of spectrum unlike the defence forces in some European countries, including the ex-Soviet bloc countries. A significant amount is set aside in the United Kingdom for defence. In Ireland, it is a much smaller amount but we do engage in dialogue with the Defence Forces on the amount they use with a view to minimising it as much as possible.

We have various powers of sanction. They vary according to the type of offence. In an extreme case, we have the capability to remove licences. In some cases, we must determine whether doing so is a proportionate measure. We shortened a licence in one case. We can seek fines. There is a case in the High Court at present seeking a fine of up to €500,000, the maximum permissible fine. We have a range of sanctions available to us and we must use the one we believe is appropriate and likely to be effective on a given occasion.

The Chairman asked an interesting question about our economic basis as an agency and how our being very dependent on the levy might affect our freedom of action. The levy, which is 0.2% rather than 2%, is not our only source of funding. In addition, we have spectrum access and usage fees. Those are significant sources of funding in themselves. I would not want the committee to believe the levy is our only source of funding. If the members are concerned that we might be shy in taking action in regard to the big levy payers, they should note all the top five payers have been at the receiving end of significant compliance actions by ComReg over the past two years. There is no sign that our freedom of action is curtailed by the economic connection. We have no concerns in that regard but it is a potential issue.

It was stated in regard to broadband availability that there is sometimes a trade-off between width and depth, or coverage and speed. This is the case and we must ensure people have wide availability of broadband and that the quality and speed are sufficient for the applications and services they use.

Chairman

What about roaming?

Mr. Alex Chisholm

Inadvertent roaming.

Chairman

Inadvertent roaming.

Deputy Éamon Ó Cuív

We refer in particular to Donegal, Cavan and Louth.

Mr. Alex Chisholm

We have dealt with some cases of inadvertent roaming. It is particularly the case because the transmitters on the south of the Border are a little stronger than those on the north. It does not make a big difference for consumers in the Republic because the operator is charged the same rate for services on both sides. The one-island approach to pricing is such that the consequences for the consumers in the Republic are not negative. There is a chance that consumers in the North may be hit for roaming charges. This does not apply to consumers in the Republic because the North is not treated as a European country for roaming purposes.

Chairman

I am not sure because some of our colleagues who commute to the North have a different opinion.

Mr. Alex Chisholm

I will revert to the Chairman on that on having examined the matter further. I will submit a note for the benefit of the committee members.

Deputy Éamon Ó Cuív

Mr. Chisholm referred to DSL giving speeds of 20 to 25 megabits per second but the reality is different. A response to a parliamentary question refers to 20% of the people having speeds above 10 megabits per second. People do not choose the speed according to what they want because they choose according to what they can get. The main determinant is the issue of contention. When everybody is on the system at the same time, it becomes interminably slow, cranky and impossible to work. The service becomes suboptimal to one's needs. The better the service, the more one will use it and the more applications one will use. Perhaps Mr. Chisholm will state what is available around the country because my perception is that the vast majority on DSL are not receiving anything like 20 megabits per second and are instead receiving a fairly basic service. Contention is a major problem.

Mr. Chisholm referred to having a speed of 30 megabits per second across the country by 2020. In a fast-moving world, eight years is a long time. Mr. Chisholm implied half the megabits would be for half the people, which means one would supply the towns and cities and tell the remainder to go to you-know-what. Does Mr. Chisholm regard the target as satisfactory? He keeps referring to the European standard but if the European standard is not high enough, what is the position? We want to be way ahead of the European standard, not following it and driven by it. If other states in Europe want to set low standards, let them do so.

Many years ago, there used to be a trunk call from the Aran Islands or Clifden to Galway. This was similar to what my colleagues face. I started a campaign over the matter. The system was not arranged so one could get into the neighbouring call charge area. I cannot understand - I have argued this with colleagues - why this country is not mandatorily in one call charge area. There is no technological reason to charge more for a telephone call from Ballydehob to Dublin than for one from Ballydehob to Clonakilty. Doing so does not make sense. The idea of a uniform electricity charge for one unit of electricity irrespective of one's location in the State has been very much agreed. The idea of imposing a universal postal charge would be influenced by the fact that one must physically carry a letter. Once broadband infrastructure is put in place, there is no really significant cost associated with the transfer of information. Mobile transmission operates on a national basis. Therefore, I cannot understand why we cannot bury this matter once and for all and have one national call charge area for the whole State.

I could not follow what Mr. Chisholm was saying about the 800 MHz spectrum. Although he referred to coverage of 70%, he said at first there would be no population targets and that the market would look after the matter. Mr. Chisholm is referring to setting the target in case the market does not do so. If it would set the target in any case, doing so would be no burden to it. I fear the market will not set the target and service the relevant areas such that competition will, once again, not result in delivery. Mr. Chisholm might clarify that issue.

Has Mr. Chisholm considered the mandatory serving of mast infrastructure in rural areas so they will get a good service? In other words, one would scientifically design a set of masts that would cover 100% of the territory and to which everyone would have access. They could then compete to use those masts. The blackspots that existed five years ago with regard to the ordinary old-fashioned mobile telephone, are still there. They are in the most surprising places, not just in the mountains where we have quite a good service. They are in some populated places such as Moycullen, Barna and Spiddal in my constituency. They are all near the city. One also finds them in Tourmakeady in County Mayo and in other places. As Mr. Chisholm said, they do not appear to be technologically different areas. We are aware of the problem with objections to the erection of masts. RTE has a very good system of masts around the country. In areas of low competition, would it be possible to enforce a regime of mandatory sharing of the physical infrastructure and mandatory access to it in order that we could get proper coverage and that we would focus on the user not on the provider?

Mr. Alex Chisholm

I thank Deputy Ó Cuív for those further questions. I will address them as best I can. On the download speeds, we agree that what is important is the need of the consumer and the service he or she is trying to access. If one is trying to access a website to purchase a ticket or to use broadband to send e-mail then even 1 Mb will generally be sufficient, whereas if one is trying to download video content, in particular whole films and in high definition, that would need a much faster speed to do it quickly. There is a range of applications. It is also the case that online gaming is very demanding of online networks and works best off fibre access rather than copper access. It depends on the type of application one is trying to download. I am sure the Deputy is correct that it will evolve over time. More and more consumers get into the habit of using it and they assume they will get a fast speed and they get frustrated when they do not get that every time. That is a significant issue.

On copper, to clarify what I said, it was not that all of the copper at the moment delivers a sufficient service, because I agree that it does not. What I was trying to say - I am sorry if it did not come across clearly - was that the way in which copper is capable of being used can deliver very high speeds and that it constantly improves year in year out. At the moment the kind of speeds one is able to get from copper are very good where one is close to fibre. Where Eircom has rolled out fibre it is able to deliver speeds of 15 Mb or 20 Mb.

Deputy Éamon Ó Cuív

What does Mr. Chisholm mean by close?

Mr. Alex Chisholm

At the moment the company said that it wants to roll out an entire next generation broadband network on which it will spend €400 million and to do that across approximately two thirds of the country initially. That is a substantial project but only the first year of it is firmly committed at this stage. How far that gets depends on a combination of using fibre right to the home in some cases and in others it will go to the cabinet. In either of those cases-----

Deputy Éamon Ó Cuív

Is that in an urban context?

Mr. Alex Chisholm

In either of those cases it will give very high speeds. How far it gets across the country is a vital issue. We entirely agree that it is a matter of national interest at this stage. If one has fibre going to the exchange - there are still exchanges that have not yet been digitised and do not have access to fibre - and then to the cabinet, the speeds one will get in either of those cases will be far greater than currently experienced on copper. I do not say that all the copper is satisfactory at the moment but that it has the potential to provide much higher speeds.

The Deputy is correct on EU targets. Although we are a member of the EU we should not necessarily say that we are slaves to targets adopted at a political level. I accept that this country subscribed to targets at European Council meetings. If it is appropriate then we can go faster than the targets set and we can set our own interim targets. That is exactly the work on which the next generation broadband taskforce is engaged. We will look with great interest at the findings they reach. I understand the report is due in the next two months. That will be of great interest to us, as I am sure it will be to the Deputy.

On mobile coverage, I wish to highlight that it is not the case that no coverage requirements are in place because a considerable amount of coverage requirements will remain in place. For example, in regard to the 2G services there are licences continuing into 2013 in two cases and 2015 in another case.

Deputy Éamon Ó Cuív

Will 2G operate with a smartphone?

Mr. Alex Chisholm

It is used for a particular type of service which is called the EDGE service. The way these devices work now is that they use 2G and 3G in combination depending on what one is trying to do.

Deputy Éamon Ó Cuív

How can one put e-mail on to the smartphone?

Mr. Alex Chisholm

For data such as e-mail it would use a combination of 2G and 3G services.

Deputy Éamon Ó Cuív

Yes, but would one have to have 3G?

Mr. Alex Chisholm

That kind of phone would be using 3G.

Deputy Éamon Ó Cuív

The point is that the smartphone is not just the preserve of the few. They are what people are using. Let us allow that 3G is universally needed, including by those who are on top of a mountain and who want to get e-mail because that is the way people are working. The smaller the business and the more rural the location, the more people use such technology because the office is where they are and they are the office. The 800 MHz licence and the 900 MHz licence will only cover 70% of consumers, which could be as low as 30% of the territory.

Mr. Alex Chisholm

That is not quite how we see it. The licence requirements remain in place for the FreeG services to which the Deputy refers until 2022 in one case and 2027 in the others. The minimum requirement exceeds 90%. Those requirements are in place already. What we are talking about is not using the new spectrum, which is at 800 MHz and 900 MHz, which is much more suitable for national coverage so it would be much easier and cheaper for the operators to provide a high level of coverage. They will not use the FreeG spectrum which is further up at 2.1 GH. They are much more likely to use the new spectrum, but in any case they will have to meet the requirements that are already in place in their licences running right through until the third decade in this century which will take them up into the 90% coverage area. They will go further than that to meet the needs of their consumers. It is not the case that any country in Europe has 100% coverage of mobile. It would be very high-----

Deputy Éamon Ó Cuív

We could be the first.

Chairman

Is it Mr. Chisholm's intention to monitor that?

Mr. Alex Chisholm

We actively monitor conformity with the licence conditions. In any particular year we do approximately 2 million measurements all around the country of compliance with both 2G and 3G licence requirements.

Chairman

Is Mr. Chisholm satisfied in the main that compliance is comprehensive?

Mr. Alex Chisholm

Yes, we are satisfied. If we were not then we would take action. If we find any blackspots that is the kind of information we share with the operators to make sure they have the opportunity to address them.

Deputy Éamon Ó Cuív

I do not understand. Mr. Chisholm is saying on the one hand that the operators will do it anyway. If that is the case, why have the barrier lower, even if there is a small chance that they would avail of the lower barrier? Why not just say that up to 95% coverage is required.

Mr. Alex Chisholm

The licences set a minimum level of requirements. They do not set the maximum. If we set the minimum very high, which appears to be the Deputy's proposal, then what one would say for the coverage requirements is that rather than going to 70% of the country as a minimum, all of the licence operators - the way we propose to design the auction is that there would be at least four operators - would have to go to 70% of the population, which is down to townlands of approximately 50 people. One would have four separate networks providing services to 50 people. If we took it beyond that to 40, 30 or 20 people then the level of duplication would be very intense. The level of cost required would go up, but the level of users would not increase. That would put tremendous pressure on the economics of the industry which would have the effect of pushing up the prices dramatically. What we have seen is that consumers want lower prices and communications for more service. They do not want a better service for a much higher price. That is a problem with excessive amounts of duplication. I agree with the Deputy that it makes sense to have infrastructure sharing rather than excessive levels of duplication.

Deputy Éamon Ó Cuív

The answer to the problem is to force them to share the infrastructure but if one needs four services in Dublin why does one not need four services in Ballydehob?

Mr. Alex Chisholm

For a particular area of the country, one must look at the available revenue and the cost of providing the service. That varies across the country. It probably is not efficient to have four different networks providing services in extremely remote areas.

Deputy Éamon Ó Cuív

I agree with Mr. Chisholm. I do not see the reason for four networks, one good network would do.

Chairman

There are other issues around that. In the context of a minimum of four networks, will every network have an obligation to hit the 70% target?

Mr. Alex Chisholm

The figure of 70% is not a target, it is a minimum requirement to prevent cherry picking.

Chairman

In the context of the roll out of the networks, is it possible that everybody covers 90% of the public? If the networks are required to provide a service to townlands of 50 people, could that encompass surrounding townlands with fewer than 50 people?

Mr. Alex Chisholm

In some cases.

Chairman

If every network does that, is there not a case that the networks could be co-ordinated? I know it is difficult, but could it be co-ordinated in such a way that 90% of the population is covered by the 70% obligation?

Mr. Alex Chisholm

We would expect much more than 90% to be covered. The licences will require the population to be covered in that way, using whichever bands are available, under the existing licences, which will remain in place until the third decade, they serve, in one case, over 90%. The minimum requirement is already much higher. The 70% is not really the minimum requirement.

Deputy Noel Harrington

On foot of that, in striking a balance between regulation and competition, is there a mechanism, in light of technologies becoming cheaper as they evolve in the coming decades, of varying the minimum requirement? For example, that it be 70% until 2015 and that it be then increased to 80% going to almost 100% by 2020.

Mr. Alex Chisholm

That is a very good question. It is open to us, if justified and proportionate, to request the providers to look again at the levels. It is also the case that although we are very fixated by particular spectrum bands because they are becoming available that other bands will become available. Already there is talk at European level of a second digital dividend, which would be a little bit lower down but would be very suitable for wide access. Every time we approach the awarding of a new licence, we set the appropriate level of requirement. At that stage, having taken account of technology and consumer satisfaction, we may look at the default position, which for me, is the universal service. Mobile licences are not a universal service. Universal service is defined at present at a fixed location. If there is a separate debate about whether that should include broadband and mobile services - - - -

Deputy Éamon Ó Cuív

The idea that a universal service in 2012 is not about a high quality fixed and broadband service is from the perspective of the 20th century and not the 21st century. Ireland is a small island, not much bigger than city areas in the USA. I cannot understand how we managed to provide electricity to every area across the land between 1946 to 1956 and put copper into every corner and we find it impossible, in a time when we have much cheaper technology, to get universal telecommunications of a high standard across the land? That just blows my mind. One should be able to go and use the service.

A second point that I find very strange is Mr. Chisholm's comment that one needs high speeds for film. I understand that UPC is doing very well in the roll out of the service in Dublin and in the areas that have cable. I presume that people are using the high specification that UPC can offer. The requirement of the people in the non-high specification areas is just as great and the desire to be able to do whatever they are doing with the services in the city is just as great outside the urban areas. Somebody made a gratuitous remark about the black and white television. If anything, my experience is that people living in rural areas take advantage of technology as it brings the world to them rather than they having to go to the world. People in Dublin can go to see a film and do all sorts of things. In the country, communications have absolutely revolutionised lives. I remember when the first mobile phone was introduced. People thought it would be ages before those in rural areas would buy one, but soon all the small farmers who came to clinics had mobile phones. They might not know their mobile number but they can work it to their own satisfaction. They could use it when out working the land. They have moved on since that.

Will Mr. Chisholm explain the reason that the old copper lines are not removed when fibre technology is installed in houses?

Mr. Alex Chisholm

The current proposal is that there should be a transitional period. This protects the interest of existing operators providing copper-based services, so called, local loop unbundling, LLU operators. It also represents a technology plan from Eircom to lay an overlay rather than a replacement system. Their intention is to offer fibre-based services as an alternative to customers and to go down the street and lay on the fibre services there and the people on the street could say they would like the new service and they would take it. Those people who do not wish to take it would be able to stay on the copper service. It is to give people a choice.

Deputy Éamon Ó Cuív

Can one not deliver everything that one delivers on copper by using fibre technology?

Chairman

The point is that some people do not want all the services that fibre technology can deliver but want a basic service that can be delivered over the copper wires. We had the opposite argument earlier about doing away with choice. This is to allow people to make a choice of having a basic service at a basic cost. I am not quite sure whether we want to try to harvest copper to sell as recycled material. I do not know whether that should be on our agenda.

Deputy Éamon Ó Cuív

If I want to make my calls on my fixed line phone, much of it will be transmitted by fibre technology, unbeknown to me.

Mr. Alex Chisholm

Just not the part of the service provided by local access.

Deputy Éamon Ó Cuív

Why not do the part that services local access in the same way? If one only wants to use the landline, it will work as well with the fibre technology as with copper lines. Is that not correct?

Mr. Alex Chisholm

I do not feel I can improve on the chairman's answer.

Chairman

With due respect to Deputy Ó Cuív, that is a moot point.

Deputy Éamon Ó Cuív

I understand it has cost implications, and that the company would save money if it could pull out the copper wires.

Chairman

I thank members for remaining to hear the detailed contribution from ComReg. The structure of ComReg is slightly different from other agencies and authorities. ComReg is not a semi-State company but an independent agency, funded in a particular way, a concept that takes time to get used to. The fact that ComReg pays a dividend to the State, which is not the core point I want to make, is also something which intrigues me.

It is part of this committee's role to ensure that ComReg as an independent agency stays independent and is able to fulfil its role. Deputy Harrington made the point about the difference between competition and regulation. At times ComReg is overseer of both and can draw the line between what is fair competition and proper regulation. We have it to an extent with the way the Competition Authority and the National Consumer Agency work. What is always seen as good competition is not always good regulation, however. Under the committee's agriculture remit, we see how, with the power of the multiple retailers, one wants competition but proper regulation at the same time.

I thank Mr. Alex Chisholm as well as Mr. O'Brien for this introductory engagement with committee members and I hope they will return if needs be.

Mr. Alex Chisholm

I thank the Chairman. We do welcome very much the level of interest and engagement. On behalf of ComReg, I extend an offer to the committee to visit our premises and meet other members of the ComReg team. We have hosted similar visits from the committee's predecessors. Such visits provide more scope for informal debate and information exchange like the kind we had today.

Chairman

When Mr. Chisholm spoke about callcosts.ie, I recall an information session at the Leinster House 2000 coffee dock at which everyone was given a key ring with a supermarket trolley token.

The joint committee adjourned at 4.35 p.m. until 1.30 p.m. on Tuesday, 7 February 2012.