I welcome Mr. John Doherty, chairman, Mr. Alex Chisholm, commissioner, and Mr. Michael Byrne, commissioner, to discuss the role of the Commission for Communications Regulation. I draw their attention of the fact that while members of the committee have absolute privilege, the same privilege does not apply to witnesses appearing before the committee. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against any person outside the Houses or an official either by name or in such a way as to make him or her identifiable. I propose we hear a presentation by Mr. Doherty, after which we will take questions from members of the committee.
Role and Functions: Discussion with Commission for Communications Regulation.
Mr. John Doherty
On behalf of the Commission for Communications Regulation, ComReg, I thank members for their invitation. We wish the joint committee every success in the important work on which it has embarked. I will make a short opening statement. My fellow commissioners, Mr. Mike Byrne and Mr. Alex Chisholm, and I will be pleased to answer any questions the committee has thereafter.
ComReg is the independent statutory body responsible for regulating the electronic communications and postal sectors. It is a focused, results oriented organisation, regulating highly complex sectors where the quality, experience and knowledge of our staff are critical. The sector we regulate, namely, postal and electronic communications, comprises, as I am sure members would agree, vital building blocks for a knowledge economy such as ours. It is not a question of whether we should have an effective, efficient and diverse communications sector to underpin the economy — it is a must.
The electronic communications and postal sector has a revenue figure of approximately €5.5 billion per annum, employs some 17,000 in 150 companies and accounts for approximately 3.6% of GDP. Irish consumers are high users of electronic communications services, particularly mobile phone services. There are approximately 4 million handsets in circulation. We send approximately 4 billion texts per annum. At the end of January, there were approximately 1 million broadband consumers in Ireland, one of highest areas of growth in Europe. Of interest is that mobile broadband has, in the past nine months, taken on almost 120,000 new customers and we now have three separate companies providing a mobile broadband product. The sector is entering a period of significant technological change with the deployment of next generation networks in the fixed, cable and mobile phone areas and there is increasing convergence between products, services and different platforms in technologies. Exciting new wireless technologies are changing the industry as we speak.
In the postal area, the European Commission decision to fully liberalise the market in 2010 will bring new opportunities and challenges to the industry and will provide a defining period for the sector. ComReg's powers to regulate the market stem from European and national legislation. Its powers were recently enhanced by the Houses of the Oireachtas through the Communications Regulation (Amendment) Act 2007. The European Commission is currently reviewing the regulatory framework and is proposing to introduce significant new changes in terms of regulation for national regulatory authorities such as ComReg including reducing the number of markets to be regulated and providing new remedies by functionally separating capability for electronic communication companies.
ComReg's strategic focus is based on three principles embedded in the legislation around competition, protecting and informing consumers and innovation. The first principle dealing with competition seeks to ensure ease of access and cross-platform competition. Following a poor start in terms of broadband, we now have four distinct platforms from which people can get their broadband services. This is a very good achievement. An example of our success in terms of driving competition is ComReg's use of the spectrum available to it to enable the provision of wireless broadband today. Today, 100,000 customers in Ireland receive broadband over wireless. We are one of the leaders in Europe in this regard.
The second principle deals with protecting consumers in terms of enforcement and compliance activities and ensuring that consumers can make informed choices. We have learned during recent years that one of the bedrocks in terms of driving competition is that consumers be fully informed and able to make choices which of themselves drive competition. As a result of ComReg's working with the Data Protection Commissioner, 900,000 consumers in Ireland have been able to opt out of getting unwanted marketing calls, which of itself is a significant achievement. In addition, in terms of informing consumers, we have developed a number of award winning websites including www.askComReg.ie and www.callcosts.ie which had 1.6 million hits in the past year, a growth of 47%.
The third principle is facilitating and driving innovation. I am sure members are aware that radio spectrum is one of Ireland's key natural resources. As an island with limited demands for defence industries, we are able to develop and utilise spectrum in a manner in which many other countries in Europe are unable. The radio frequency spectrum is an essential requirement of the telecommunications sector for a whole range of industries including aviation, shipping, broadcasting, people using taxis and logistics companies. Ireland is a leader in the wireless broadband area. We have also developed an international reputation in respect of our test and trial regime which allows companies to come to Ireland and use the framework we have put in place to try our new products and services.
We have developed a licensing framework for digital terrestrial television deployment which, it is hoped, will be in place later this year. In terms of strategic planning, ComReg has an embedded strategic planning process in place. Our strategy statement for 2008-2010 identifies four high level goals to achieve our overall objectives and articulates a range of performance measures in respect of each strategic goal. Our annual action plan sets out the detailed outputs and timelines for each project. Copies of this are included in the information packs provided to members.
The pursuit of ComReg as a centre of excellence has been a core objective since its inception. We need to be able to respond swiftly and effectively in a rapidly developing market. The decisions we make can have far-reaching consequences for the industries we regulate and, therefore, our decisions need to be correct, reasonable and proportionate. Changes to the European regulatory framework in recent years have placed significant new responsibilities on ComReg in terms of the new market analysis process, initiatives to protect consumers and dispute resolution activities.
The Communications Regulation (Amendment) Act 2007 also assigned to ComReg new powers and additional responsibilities including the emergency call answering service and the .ie domain registry. We are fully committed to monitoring and measuring our performance and to sharing such information with members. ComReg, as members may know, does not receive any State funding. Rather, it is funded by industry levies from the electronic communications and postal sectors and spectrum fees. During each year of its operation ComReg has provided a surplus to Government through the Department of Finance ranging on average from €10 million to €12 million per annum. We have returned more than €23 million to the Exchequer in the past two years.
As an organisation, ComReg is committed to the highest standards of public accountability and probity. Value for money is a core component of this. Cost comparisons between regulators at national and international level are somewhat problematic as many of the regulators in Europe have different ranges of responsibilities to ComReg. Nevertheless, high level comparisons of organisation size and expenditure would indicate that ComReg is a cost effective and efficient communications regulator. We are pleased to be part of the review currently being undertaken by the Department of the Taoiseach in respect of the Irish regulatory environment.
The committee will appreciate that a key resource for ComReg is its people and that as such, the recruitment, development and retention of staff is critical to our continued success. We have an authorised staffing level of 120 which has remained static since 2002 despite considerable growth in our mandate and changes to the regulatory framework. ComReg is a professional services organisation made up of engineers, lawyers, accountants, economists and business analysts. Our staff is well qualified. Almost 90% of staff has primary level degrees; 25% has masters' degrees and four have doctorate level qualifications. We are an organisation that invests in its skills and human resources strategies to ensure its people operate at their optimum. Our commitment has been recognised through a range of different awards including the Excellence Through People accreditation. As a commission, we are particularly pleased to note that outside bodies have recognised the work and effort we have put in, in terms of developing our staff.
A telecommunication industry is a vital component in a modern economy such as Ireland. We need to have a diverse, competitive industry to underpin our continued success. In this context, we have undertaken a range of different initiatives including the provision of an efficient local loop unbundling, LLU, process. Local loop unbundling has been a key catalyst for driving broadband take-up in a range of markets from the UK, France and others. We view this as an important element. We have also published a roadmap for transition to next generation networks providing clarity for operators as to how this process will work and how the transition will be managed. We have defined quality standard improvements for line installation and fault repairs for Eircom; implemented a licensing regime for digital terrestrial television; enhanced competition in the wireless and broadband area through our fixed wireless local access and have developed complaints and disputes resolution guidelines for the postal sector.
In looking forward, there are a myriad of challenges facing ComReg. ComReg regulates a highly complex and fast moving industry. I will briefly touch on three areas in this regard. The first is the potential structural separation of Eircom. Were this to happen, it would be a worldwide first. There has not been an example of such structural separation anywhere in the world. Clearly, this poses new opportunities and challenges for regulators such as ComReg. The second is the demand for higher speed broadband and a move to next generation networks. Clearly, this is an important dimension for a knowledge economy like ours and poses new challenges in terms of digital divide and new opportunities for new products and services. The third area is full liberalisation of the postal sector. There is a real opportunity to have a competitive and open marketplace in postal services, a prerequisite for which is to have an appropriate legislative basis in place. We look forward to working with the various parties in doing this.
ComReg welcomes the opportunity to appear before the committee and assures members that it is a focused, value conscious organisation committed to promoting competition and thereby facilitating Ireland's competitiveness. We will be pleased to answer any questions members may have.
I thank Mr. Doherty for his presentation. I am totally gobsmacked to learn that 4 billion text messages are sent per annum from 4 million handsets. Those of us present are significant users of mobile phones. The bills paid by members are very large. We are horrified when we compare the average mobile phone bill in other countries with the average Irish bill. How can that issue be resolved?
The next generation of networks is of particular interest. Ireland always tries to lead the field in high technology industries. We hear from companies such as Microsoft that they are appalled at the poor speed and lack of access available to executives in hotels to make conference calls on VoIP, for example. When will these services come up to a standard one might reasonably expect in a country with fourth generation networks, which Ireland is supposed to have?
Has ComReg, to date, taken spectrum back from those who have not used it in order that others who would be better able to use it can do so? We have developed an internationally recognised test and trial regime. Is this used by companies from other countries because there is no defence requirement for spectrum here, giving Ireland greater open spectrum availability? How are the results from the test and trial regime being given effect in Ireland? Can ComReg use the results of these tests and trials? Can criteria be applied to licences requiring that the results be made generally available to improve the service available in Ireland?
ComReg returned to the Exchequer sums of €9 million and €13.5 million. Mr. Doherty was proud of these figures. I am disgusted. It is the consumer who pays. Industry levies exceed ComReg's costs by those amounts but if the levies were reduced, the consumer would have a smaller bill.
Has the Government asked ComReg not to hire more people? Is ComReg allowed to hire more people? Could the organisation be more effective if it had more people? Would it improve the service for consumers?
How detailed are ComReg's investigations of complaints and how fast are they turned around? Are complaints and the speed with which they are addressed and answered posted on the Internet? What process is in place to ensure everyone who has an interest in a consultation is fully informed and up to date on everything that is happening in relation to the consultation? One of the challenges facing ComReg is presented by Eircom. Eircom has served us well during the years but it appears that the law is being abused by certain companies to prevent further competition and block ways for other companies to become competitive such as local loop unbundling. What is ComReg doing about this? Is it a big problem?
I am delighted to have the opportunity to discuss some of these issues with ComReg. This is the first time we have met and I look forward to a long and valuable relationship between ComReg and the public representatives who are Members of the Oireachtas. I hope our observations and questions will be of as much value to ComReg as its presence is to us in better understanding the communications and postal systems.
The most recent European Competitive Telecommunications Association scorecard for 2007 rates ComReg 11th out of 19 regulators in European countries. It was previously rated first or second. Do the three commissioners accept that this has come about since they took over from the single regulator, Etain Doyle? If so, why has this come about and what do they propose to do about it? ComReg seems to be doing reasonably well in the institutional framework but falls down in effectiveness. Only the regulators in Poland and the Czech Republic are less effective, which is nothing to be proud of. I note that the European Commission has also come to the conclusion that ComReg is an ineffective regulator. It was specifically criticised by the Commissioner, Viviane Reding, last year. I will be interested to hear the comments of the commissioners on those criticisms.
In his presentation Mr. Doherty mentioned that he considered ComReg to be cost effective. I do not know enough to dispute that claim but I am sceptical as to whether it is the case. He has mentioned that the costs fall on business, not on taxpayers. However, as Deputy Ardagh said, the cost is passed on to the consumer. I understand roughly €10 or €12 a year is applied to a consumer's Eircom bill alone to pay for ComReg and consumers obviously would want to get a return from that. Is it true that the Commission for Communications Regulation has a wider mandate? I understand that broadcasting is no longer part of its brief, however it regulates the line rental but in the competitive wholesale market, it does not really regulate it. If that is the case, should costs not reduce? I understand that Ofcom reduces costs in the UK by 5% every two years. Why is the CCR not doing that if its remit is narrowing?
Eircom's fixed line business is the crucial issue facing Ireland. I know CCR has a consultants' contract out at the moment. It seems strange that CCR has that contract, because, unfortunately Eircom can do what it likes as a result of the botched privatisation of a State company. It is part of the programme for Government to accept the separation of the wholesale and retail lines, but I question whether that is a good idea. The role of the Commission for Communications Regulation is only whether it will succumb to Babcock & Brown and allow it to hike up prices in advance of delivery of infrastructure. I would be interested in the CCR's initial impressions and I would encourage it not to do so, but to expect delivery of investment and infrastructure before agreeing to any price hikes from the venture capitalists who have been allowed to take over Eircom
Deputy Ardagh stated we are paying more than the European average in mobile phone costs. People can argue that we talk more but I do not think that it is true. It is certainly not true when drawing a comparison with Italy or a number of other countries. There are things that the CCR is not doing, for example the termination rates average at 10 cent but will reduce to just under 8 cent by 2020. I understand that CCR is not enforcing that. If it were to enforce termination charges, that would bring down the costs of calls between networks by 10 cent per call which would be a significant saving. Why it is not doing that?
The EU Commission has made recent changes to voice roaming charges for inter EU calls which will be phased in over a period. Ofcom seems to be going ahead with it in the UK and will introduce it before Brussels makes it mandatory. Why is CCR not doing something similar so that we can bring down roaming charges before Brussels implements it, instead of doing it when we are obliged to do so?
I am happy, if the Chairman so wishes, to allow Mr. Doherty to field these wide ranging questions at this stage. I would come in later if that is all right?
That is fine. We will take questions from Deputy Peter Kelly.
I welcome the Commission for Communications Regulation. During the previous five years, I had many meetings with the management of ComReg. I found ComReg very helpful in addressing my queries. I hope to continue this good relationship. I hope I will not have to listen to second-hand news but will go directly to ComReg, to find out what is happening in the communications sector in Ireland. It is and has been doing a good job and dealt in depth with cases. I compliment it on taking everything into consideration and being fair to all. Dealing with big business is complicated and not as simple as it seems. One must protect the consumer but one has an obligation to be fair to everybody involved.
The legislation was amended last year, giving ComReg new responsibilities. Does this mean that ComReg has to do more work and did its staff complement increase accordingly? Convergence is the talk of the country, and everyone in Longford is talking about it. They tell me I will have a gadget in my pocket that will allow me to see television, tune into radio and send e-mails and texts. If this is the way forward, as some people suggest, is there any value in ComReg and the Broadcasting Commission of Ireland joining forces in this area?
Thank you very much Deputy. We will ask the commission to respond.
Mr. John Doherty
We are a collegiate body and with the permission of the Chair, we wish to share out the questions. I will deal with one or two areas. In response to Deputy Ardagh, we have recovered spectrum from various operators. The fact that we have a wireless broadband market, reflects the fact that we recovered spectrum when it was not being utilised fully. We are committed to continuing to do this and where appropriate we will recover spectrum again because it is a valuable asset and we are unwilling to allow it not be utilised to its full degree. In terms of staff, our complement is 120 people. The commission takes the view that it has no mandate to go above that figure and it acts effectively as a cap. We do not exceed that figure. We manage our resources. A great deal of what we do on a year by year basis is looking at the priorities we have and reviewing them in the context of the staffing priorities. Effectively we use that as the cap.
The challenge for us, and Deputy Varadkar referred to it, is that we have assumed a range of new activities. Before 2003, there was no such thing as a market analysis process, there was just an assumption that somebody who had more than 25% market share had what was called significant market power. Now we must go through an extensive process of analysis which is open to legal challenge at every step of the way. That is one illustration of the type of additional activities we have taken on over a period of time. Various new powers and responsibilities were given to us by Government, for example the amending Act in 2007 which gave us responsibility for monitoring the emergency service call answering and the domain registry.
I would like to come back to the Deputy's question at the end when my colleagues have answered some of the other ones. By way of illustration, we had to learn from the bottom up, rather than just in theory, this new process of reviewing how markets would be established, how to respond to what at that stage was the electronic communications appeal panel process and then revert to the courts. There was a significant body of additional work imposed on us at that time.
My colleague Mr. Mike Byrne will deal with the issue of the test and trial licence and NGNs.
Mr. Mike Byrne
I thank members for their questions. With regard to next generation networks, NGNs, both core and access networks undoubtedly provide a very significant opportunity for Irish citizens and consumers of electronic communications services to be provided with new services and applications, and allow the companies providing next generation networks to remove significant costs from their networks. In its simplest sense it is moving from traditional copper-based systems to Internet protocol based systems, which are far more cost effective in terms of the services required to fulfil them and for the engineering staff required to run them. What is important from a regulatory perspective is that we provide a clear certainty regarding the regulation of next generation core and access networks, particularly on the access networks. because we have a number of service providers that have already invested in what are called legacy systems. They need certainty with regard to how they can recover their costs in respect of the investments they have already made. There is a significant number of such companies, particularly on the wireless side. That is something we are examining critically to ensure we provide the required certainty.
On the other side, we are already seeing investment in next generation networks. In cable UPC, which is now the owner of NTL and Chorus whose core competency is in the cable industry, is investing up to €300 million in its NGN upgrade. All three of the UMTS networks being built could be classified as being next generation network in architecture. Work is also being undertaken by the incumbent Eircom and some of the other fixed line service providers such as BT, and by the fixed wireless access service providers such as Irish Broadband, Digiweb, Clearwire and others. There is a significant amount of investment taking place today, with more to come in terms of next generation access
What does that mean for the consumer — high end corporates, SMEs and residential? Undoubtedly the large corporates are very well served in Ireland and have been for some time. Testament to that fact is the number companies choosing Ireland as a location. There is more work to be done particularly on the residential side. The information regarding VDSL trials being run by Eircom is in the public domain. VDSL will provide capacity of up to 25 MB per second thus enabling new services such as IPTV and other services for consumers. Our role is to ensure certainty in the marketplace for the investments that have already been made. We are providing a clear roadmap for companies as to how their future investments in next generation access can be secured and properly regulated so that there is a proper return on investment.
In regard to test and trial licences, we have developed a test and trial licensing scheme over several years of which we are very proud. It has received much favourable comment internationally. Ireland stacks up very well internationally in terms of our test and trial licensing scheme. The Koreans came over last year to inspect our test and trial licensing scheme. We are an island off the coast of Europe and we have developed quite a competency in both mobile and fixed wireless base. A number of trials are ongoing, including trials from the Government, O2, Vodafone and HP Intel.
In regard to Deputy Ardagh's question, we provide on our website information on all ongoing trials, their purpose and when they commence. Some aspects of trials are, of their nature, commercially sensitive but we are always keen to provide as much visibility as we possibly can in regard to trials. What is more important is that we are keen, when a trial has been successfully delivered on, to move as quickly as possible to licensing it. We had an example of that only last December when a company conducted a trial in what is called WiFibre in the very high 71 to 81 gigahertz band which involves sending vast amounts of data over short distances. It was conducted in the IFSE. We have now moved to a licensing regime for it and it will benefit companies that wish to transmit data without having to physically build fixed links. It can be done using radio waves instead.
Mr. John Doherty
I will ask my colleague, Mr. Alex Chisholm, to address the issues of mobile phone bills and complaints.
Mr. Alex Chisholm
In regard to high mobile phone bills, we agree they can be a significant expense. It is an area of concern for us and one we monitor very closely. The chapter on mobile phones in the quarterly report shows that according to research carried out independently by Telegen the tariffs charged to Irish mobile telephone users are around the middle or bit ahead of the middle when compared to tariffs in other European countries, so we have reasonable value. The reason the bills are higher each month is that we as a country use mobile phones more than a number of other countries. We are in the top quarter in regard to usage of mobile phones. That means our average revenue per user, which is the measure the industry uses, is also in the top quarter.
Tariffs should be much lower to compensate.
Mr. Alex Chisholm
Relatively speaking we would agree that as one adds additional usage there should not be a one for one increment. There should be some efficiencies possible for the operators.
We should not aspire to be average. We should aspire to have the best value.
Mr. Alex Chisholm
We agree with that. Observing the way the market is developing, there are four network operators and, last year, a fifth player in the form of an NVNO, a virtual network operator, with Tesco. There is scope for more virtual network operators. We have all seen and witnessed, from our own experience and in advertising, a great deal of competition in the mobile market. The penetration rate, or the number of mobile phones, is approximately 114%. Clearly if the mobile phone companies are to continue to grow their business, they must compete very intensely with each other. There are not very many people who have not got a mobile phone who might want one. We are seeing a change in the competitive dynamic and much more competitive pricing. That is driving down the ARPU, which is the measure I mentioned before. We have seen recently from Vodafone's results that average revenue per user in Ireland is coming down, so we are seeing competition proving more effective as the number of players has gone up. Another element within that is the continuing strength and growth of Meteor which has eaten into what was originally a two-player market. That has improved the competitive dynamic.
In terms of our interventions to further improve that situation, as well as licensing new operators such as Tesco to come into the market to increase competition and all the 3G networks we have licensed over the past three years, we work hard to provide information to consumers. If any of the Deputies and Senators have not seen our website — if the committee will excuse the commercial break — the worldwide web address callcosts.ie is a site used by many hundreds of thousands of users in Ireland to shop around and get the best mobile phone package and other telecommunications services. That is one way we try to bring additional competition to prices through transparency.
Moving to the regulatory side, Deputy Varadkar mentioned roaming and MTRs. In regard to roaming, this week we publish our first report monitoring the implementation of the roaming regulations. The roaming regulations cover the use of their mobile phones in the rest of Europe by Irish consumers when outside Ireland. Historically people have been charged a great deal to make and receive calls and also for texts. That is why regulation was introduced by the European Union with our encouragement and that of a number of other member states. It sets the rate at a lower level for receiving and calling, and that is mandatory. We have been monitoring the impact of that in the market over the past six months and we found that all Irish mobile operators are compliant with that new lower rate. Roaming rates have come down effectively over the past six months. We have noticed two catches. One is that the roaming regulation applies to calls received and made but not to texts and other data services. We have noticed that although Ireland is in line with other European countries for data services, costs are still high relative to what people are charged for sending a text within Ireland, and it is hard for us to understand the rationale for such a large disparity. That is an area on which we are focusing.
The other aspect in regard to roaming is that the charging is generally made by per minute usage. That means that if one makes a ten second call one is charged for 50 seconds one has not used and similarly if it is a 70 second call. That is an element that represents bad value to the consumer which we find hard to understand and accept and it is something with which we want to challenge the operators. My colleague, Mr. Doherty, will answer the question on MTRs.
Deputy Ardagh raised the question of complaints. I am pleased to be asked such a question, as complaints account for a considerable amount of our activity. The total volume received in our contact management centre was 34,000 — a large volume of activity. That figure covers telephone calls, e-mails and letters. Most would have been information requests, a large percentage of which are dealt with on the spot, without any follow-up action on our part. People ask where they need to go for information, what their rights are, how to interpret a Bill, etc. The number of such calls which translated into complaints was approximately 3,000.
We keep close track of the statistics relating to our handling of complaints such as response rates. In 2006 we dealt with 47% of complaints within ten days. In 2007 the figure went up to 56%, an appreciable improvement in our internal processes. The vast majority of complaints, 86%, are closed within one month; only a small number are still open towards the end of the 50-day period. That may seem a long time to deal with a complaint but I emphasise that 90% are dealt with on the same day. The remainder are serious complaints which, in almost all cases, require that we intervene with the relevant operator to obtain answers to questions such as why a fault has not been repaired or why a person has had to wait four weeks for an installation. We intervene with the operator, whose engineers may be working with contractors on a particular job in the engineering department. They get back to us and usually remedy the problem but sometimes we have to escalate the matter through the operator's management chain. Therefore, it can take as long as one month to cleanse.
The commission could do with a Deputy working for it.
Mr. Alex Chisholm
Yes, that would ensure a matter would be escalated.
The results are improving. We respond more quickly to e-mails and telephone calls than letters, because of their nature. Ideally, people will not have complaints or issues they wish to raise and they will not need to approach the regulator for information as they are being well served. With that in mind, we have put a lot of emphasis on developing our websites as a source of information. As members will have seen in the pack we distributed, in 2007 we had 1.6 million visits to the websites, an increase of approximately 50% on the figure for the previous year. ComReg and callcosts.ie, which I mentioned, have become major resources in that respect and the websites are now an important information channel.
We were asked if we published information on our response rates. We publish some information but probably not in as much detail as we have given today. However, we will look at that issue in the context of future annual reports.
Mr. John Doherty
Will I briefly respond to the comments made on the ECTA report or would the Chairman prefer if I answered all questions together?
I will allow other Deputies to ask questions and return to Mr. Doherty.
I will be brief. I thank the commissioners for their presentation. I am probably typical of most people in not being a technophile, although neither am I a technophobe. I have a BlackBerry and access to all the communications I need, which I am fortunate that my position in this House allows but which is not typical of everybody. There is a glaring disparity between those who will eventually be able to avail of the next generation networks and others, many of whom I represent in a mixed urban and rural constituency, who must still dial up to gain access to broadband. If ComReg's modus operandi is one which seeks to protect the consumer, it is incumbent on me to ask why there are people in rural areas who do not have access to broadband. How soon can they expect access to it? Given the glaring disparities between those who can avail of next generation networks and those who are still dialling up, questions have to be asked of somebody. Is this a result of Government policy? If I ask the Minister a question on the rates of penetration in respect of broadband roll-out, I am told it is a matter for the individual companies involved and a commercial consideration. If that is the case, does ComReg have any competence in that regard? Can it put its boot up a company’s proverbial backside to force it to roll out broadband?
My other question relates to the situation involving a typical person living in a rural area of County Cork when an application for the erection of a mast is suddenly made to the county council, whose policy of co-location means that three masts can be erected in one area. That is of great concern to people in the community who are powerless to do anything about the matter. Can ComReg assess the level of radiation in the area to allay their fears? Does it have the power to ensure the policy of co-location espoused by the county development plan of a local authority can be overridden? What redress does an individual have if he or she has legitimate concerns about that policy?
My next question relates to the postal sector. We are all familiar with the Bolkestein directive on the liberalisation of postal services and the stormy passage it enjoyed. Liberalisation of postal services has been on the cards for a considerable time. Concerns have been expressed to me on the question of whether it can be guaranteed that there will be a universal service obligation. If somebody lives in a remote rural area, does he or she have the same rights to a postal service as somebody living in a town such as Mallow, Fermoy or Mitchelstown? Will ComReg have a substantive role in ensuring this?
I understand there is provision for a certain amount of radio spectrum or bandwidth to be given over to religious or community organisations. I refer to WPAs but as I do not even know what they are, the commissioners must forgive me. I am not, as I said, the most technically minded. What has been the take-up of that facility? What is the percentage of broadband penetration in the country as a whole?
Mr. John Doherty
I will ask my colleague, Mr. Chisholm, to take the questions on broadband and the postal service, while Mr. Byrne will answer the question on masts. I will then return, as some of the questions require collective responses.
Mr. Alex Chisholm
I had experience of living in a rural area for a number of years when I ran a small business in north west Meath and waiting to gain access to broadband. Therefore, I share the frustrations of Deputy Sherlock's constituents in that regard. ComReg has been a champion of broadband for a number of years. We see it as very important to the development of the knowledge economy and an information society. Any consumer or business which wants broadband should be able to access it. Therefore, we share the Deputy's point of view on the issue and are keen to see the continuing roll-out of broadband.
As requested by members, I will try to provide some facts and figures to show where we stand today, the remaining areas where improvement is required and how we see this happening. Ireland got off to a slow start in 2002-03 when broadband was not widely available, was expensively priced and not marketed aggressively. This is one of the reasons we lag behind. It has been widely reported that Ireland has been catching up dramatically during the past two years. It has been the fastest growing market in the OECD. As Mr. Doherty mentioned, we estimate that at the end of January there were approximately 1 million subscribers. We do not yet have the final figures. In terms of household penetration, this amounts to approximately 35% and, in terms of subscribers per 100 population, approximately 22%. This puts Ireland more or less in the middle of the European pack, although, as stated by Deputy Varadkar, we do not want to be in the middle of the pack, we want to be towards the top. There is a need for continuing improvement which will be achieved through greater coverage. Currently, broadband is available in approximately 85% of the country, either by way of a fixed line network — Eircom has digitally enabled its local exchanges, allowing packages to be sold by other competitors — or a fixed or mobile wireless network. The roll-out of the national broadband scheme will make a difference in rural areas. Members will be aware that the Government has set aside funding for its roll-out and that announcements about the tender will be made in June. The purpose is to ensure the availability of broadband within the following 18 months in areas where it is not yet available.
Effectively, the group broadband schemes were done away with. The SWRA which operated the scheme in my constituency was making great progress in this regard. However, it is to be replaced by the national broadband scheme. As I understand it, the criteria governing eligibility for the provision of broadband have changed. Where it is deemed there is a service provider in a particular area, no other person may apply to provide a service. While parts of north Cork are serviced by a service provider, more rural parts of the county do not fall within its remit. Arguably, people will be left behind, despite the introduction of the new scheme. I wonder if ComReg has a role in this regard and hope my point is clear.
Mr. Alex Chisholm
I understand the point the Deputy has made. In designing the national broadband scheme it was considered inappropriate for the State to subsidise competition with existing players in the market for state aid control reasons. It was also accepted that an operator in a particular area might not be able to ensure sufficient coverage. This is the issue to which the Deputy is alluding. One of the criteria in determining whether an area is covered is whether an operator can cover at least 90%. This goes some way towards addressing the issue. The national broadband scheme will cover areas in which no service is provided. The cut-off point is June this year.
Could those providing the service be incentivised to cover the extra 10%? The cost to the national broadband scheme could be used to incentivise or finance the incumbent to provide a service for the remaining 10%.
Mr. John Doherty
This issue relates not only to the incumbent but also to the 100,000 using wireless broadband or cable systems.
Returning to Deputy Sherlock's point, we have full-time dedicated staff trying to work through the elements of the programme. It is a complex issue. We are paying particular attention to the issues identified. We have given the operators who are notionally able to provide a service until June to do so. The areas not serviced will then go white, which means they can then by covered by the national broadband scheme. We are using the carrot and stick approach to encourage providers to deliver. Where this does not happen — we have the support of the European Commission in this regard — we will ensure the national broadband scheme is used as an alternative. We are conscious that there are areas in counties Cork and Leitrim, among others, that fall into this category. While running the competition, we need to be cognisant of this. Our objective is to have coverage around electoral districts and as broad as we possibly can. We will keep in contact with the joint committee on the matter. The national broadband scheme will be used to address the needs of areas that will not be provided with a service by June. We will continue to monitor the position.
Mr. Alex Chisholm
Much of what has been said centres on the rate of coverage of broadband, which is only the beginning of the process. Once an area is covered, people will have the option of availing of a service. We are interested in examining some of the issues which arise in that regard.
We have found that the roll-out by Eircom of its digital exchanges has been speeded up because of the threat of competition from fixed wireless operators licensed by ComReg. This has given the Irish broadband market an unusual shape as compared with the markets in other European countries not generally remarked upon, in the sense that approximately one quarter of all broadband users use wireless networks, either fixed or mobile. This is an exceptionally high percentage by EU standards. Other countries have competitive infrastructure using cable networks. Our cable industry is not enormous but the wireless industry is proportionally very large. This means there is a great deal of cross-platform competition which provides a robust basis. We want to continue the process of licensing spectrum in that manner.
A further dimension is speed. It was mentioned that people had access to the Internet by way of a dial-up connection which at a figure of 128 MB is frustrating. Many websites are not configured to work on that basis. Speeds are increasing rapidly. The norm is now 1 or 2 megs, depending on the platform being used. Even within this, operators are tending to increase speeds. Eircom recently announced an increase in speeds for approximately 240,000 of its customers — this is a free upgrade — from 2 to 3 megs, from 3 to 6 or 7 megs and from 6 to 12 megs. This will greatly increase speeds for users of the fixed service in urban areas. Those living in rural areas will look towards the impact of wireless network upgrades. A number of companies offering fixed wireless services such as Digiweb and Clearwire have announced high speed wireless services of up to 10 megs, which is of particular interest to businesses.
For ordinary consumers and SMEs, mobile HSDPA has terrific potential in rural areas. It offers a high level of coverage and, as members may be aware, speeds of up to 3.6 megs are advertised, although the actual speed experienced tends to be approximately half of this figure. The next upgrade of the HSDPA, mobile wireless, system involves a doubling of the current figure to 7.2 megs, while the technology is capable of being upgraded to a figure of 14.4 megs. Mobile wireless systems will play an important role in rural areas. As I mentioned, this is one area in which there is a healthy level of competition. We have the same number of operators in this market as the United Kingdom, a market of much greater size. We are, therefore, well served in terms of the number of operators.
The other dimensions of broadband take-up relate more to applications. Most of the traffic is directed towards information sites and the purchase of tickets. There is very little traffic directed towards education or e-government sites which are important drivers in broadband take-up. Partly because of this we see it as very important to address the needs of disadvantaged groups of all types in relation to broadband. One can be disadvantaged because of age, disability or one is living in a remote area. We want to make this a big focus of our work this year, both in awareness raising and education. We do not want to get into the so-called digital divide. Through our outreach activities we want to focus on this aspect.
Mr. Mike Byrne
I thank the Deputies for their questions. I will deal with two areas — non-ionising radiation and wireless public address services, both of which are extremely important. As mentioned, one of ComReg's functions is to provide licences under the various wireless telegraphy Acts for users of spectrum. They include mobile, fixed wireless, broadcast and satellite users. One of our responsibilities under the Acts and the general authorisation legislation is to monitor for non-ionising radiation. There is a clear distinction between our responsibilities and those of others. Our responsibility is to ensure the communications equipment which transmits on the radio spectrum is compliant with its licence conditions. We monitor the non-ionising radiation parameters to ensure the equipment is within the limits set by the International Commission on Non-Ionizing Radiation Protection, ICNIRP. We must satisfy ourselves that that is the case. If not, the company providing the service is in breach of its licence conditions and further action will be taken.
We monitor, on an annual basis, a selection of masts. We do not have responsibility for health. Most members will be aware that in March 2007 the Government endorsed and published the report of an expert group on the health effects of electromagnetic fields. We understand the report was passed at Cabinet. The recommendation of the expert group and the Government decision which followed it was to extend the statutory powers regarding health to the Radiological Protection Institute of Ireland. It is our clear understanding that during the process of transition the Department of the Environment, Heritage and Local Government is responsible for ensuring the health dimension of non-ionising radiation is maintained, looked at and protected on behalf of consumers. I direct members to the Department's website which provides a range of information on its responsibilities and also to ComReg's website which provides information on what our role is. The ComReg website also provides an application called Siteviewer which provides information on the locations of all sites currently in use in Ireland for 3G, GSM and fixed wireless broadcasting. The relevant reports on those sites are associated with the Siteviewer application. Much information is provided by ComReg and the Department of the Environment, Heritage and Local Government on all aspects of non-ionising radiation. Since we have been monitoring sites, none has exceeded the ICNIRP limits. In fact, all are below the internationally recommended limits. It is not for us to comment on whether that is good, bad or indifferent from a health perspective. Other experts deal with that issue.
We received complaints from the Irish Aviation Authority regarding interference on bands being used by aircraft when landing at various airports. Interference was being caused by church services being broadcast on incorrect bands. We moved quickly to encourage the various religious organisations to move their equipment to the band set aside for wireless public address services. We are encouraged by the response we received from the hierarchy and other church leaders. The requirement for parishes to move to the correct equipment needed to be driven from the top down. To date, 48 licences have been issued. We would like to see this improved and continued. Irrespective of who is using broadcasting equipment, if it is interfering with the safety of life, it must stop. ComReg's role is clear in this regard. We will intervene immediately to ensure broadcasting services are using the correct band, particularly when safety of life is at stake.
How did the problem arise? Was a broadcast of mass interfering with aviation signals?
Mr. Mike Byrne
In practical terms, yes. We have clear examples from audio files received from the Irish Aviation Authority of American aircraft landing at Shannon Airport picking up "Our Fathers" and "Hail Marys" when they were about to land.
Was it being broadcast on local channels?
Mr. Mike Byrne
They were being broadcast on bands just north of the FM band. Suppliers who should have known better were providing equipment for parishes which they should not have been supplying.
Mr. Alex Chisholm
Deputy Sherlock raised the postal issue. Postal liberalisation would be a major change. When a big change is expected in the market, many are concerned about the negative implications for themselves. We understand people's concerns about the universal service and I am happy to reassure the committee that it will be continuing. It is a key part of the third directive. We see ComReg as a key part of the service. The five day per week delivery service to every household will be continued. Within the context of national pricing for residential consumers, people living in rural areas will not pay a lot more than people living in towns. I am happy to offer that reassurance.
We also take the view that postal liberalisation can bring benefits. This should be communicated to constituents. Postal liberalisation would bring some of the benefits associated with electronic communications. There will be considerable reductions in prices, improvements in efficiency and quality, innovation and growth in the market which will be good for the overall postal market. There will be opportunities, as well as threats. The precise powers given to ComReg in the new regime will depend on how the third directive is transposed into Irish legislation, which is a matter for the Department. We will be hoping to have the robust powers we believe we need to maintain the universal service, ensure fair competition in the market and protect the interests of consumers.
I will leave the postal question to another meeting.
Does ComReg accept the ECTA and Commission views of its effectiveness? Why does it not implement its own regulations on mobile termination charges? What is its general attitude to Eircom separation and at what point would it agree to higher prices for the wholesale element?
Mr. John Doherty
ComReg is not complacent. We continue to try to improve. Each day we put a large focus on the prioritisation of the task we perform. Last year ComReg published 30% more documents on key decisions than in the previous year. We constantly look at our effectiveness and value for money achieved.
The ECTA scorecard has a high orientation towards implementation, particularly local loop unbundling, LLU. Unlike ourselves, many regulators do not regulate spectrum. When the ECTA is drawing up a scorecard, it can only focus on the bits that are common in many ways. Therefore, it does not give reasonable value concerning the initiatives taken by ComReg regarding spectrum. It is clear we were not happy with the progress made in LLU. We pushed the Government to give us new powers in the Communications Regulation (Amendment) Bill to ensure we could influence the outcome as regards LLU. Since September we have provided an efficient LLU product. Coincidentally, as soon as the new powers were granted, all issues suddenly disappeared and an efficient LLU process is now in place. I do not believe the ECTA scorecard is a fair representation.
I am not sure there is full knowledge and visibility in mobile termination rates, MTRs. Annual reductions in MTRs have been agreed with mobile telephony operators. The rates range between 5 cent and 13 cent. Ireland's rates are currently at 10 cent, moving down to 7.99 cent. Every year MTRs are reduced by every operator covered by the SNMP.
The Deputy is correct in stating nothing is stopping Eircom undergoing structural separation. It announced it as a concept to us in August 2006. It is still a concept. Such a separation would be a world-first for such a company. Clearly, Eircom is a critical piece of the industrial and socio-economic infrastructure of the country. ComReg is being prudent in analysing what such a separation would mean for consumers, competition and investment. If Eircom wanted to move ahead, it could have, but it also sees it needs to have a degree of regulatory predictability in implementing its proposition.
On behalf of the consumer, we are saying this is a concept that has never been tried before. We described it being like Humpty Dumpty — if it breaks, there is no way to put it back together again. We are being prudent, on behalf of citizens, in examining this proposition in a detailed way, particularly investment and pricing, before we engage in a process from which there would be no way back. It holds some advantages which we want to consider. However, it could also change the whole regulatory framework and competition in the marketplace. We want to ensure such a separation would not lead to higher prices but result in higher investment and not damage competition.
Why has it come to a voluntary agreement for the operators to reduce MTRs to 7.99 cent by 2012? Why does ComReg not enforce it by insisting MTRs should be at cost? That alone could bring down mobile telephony charges to consumers and business by 20%.
Mr. John Doherty
The process we have employed gets us year-on-year reductions, as opposed to ending up in legal challenges. As yet, there is no clear pricing model across Europe as to what MTRs are in terms of cost. ComReg has decided to indicate to the industry the point to which we want rates to go. It should not be confused that the arrangement is voluntary. We informed operators that if the price did not come down to what we wanted, the full suite of regulatory powers would be imposed. From this came an immediate return for consumers in the reduction of MTRs. This was a pragmatic approach which has secured year-on-year reductions which will take us to about the common rate in Europe. Can we do better? Yes, we will constantly try to do so. The upside was that consumers benefited immediately from reductions in MTRs on a year by year basis which we believed was a good outcome.
I thank Mr. Byrne, Mr. Doherty and Mr. Chisholm for attending. In the coming months I am sure we will be inviting them to attend again.
The joint committee adjourned at 5.35 p.m. until 4 p.m. on Tuesday, 19 February 2008.