Joint Committee on Transport and Communications debate -
Thursday, 14 Mar 2013

Line Rental Charges: Discussion with Commission for Communications Regulation

Chairman

I remind members to switch off mobile telephones. Apologies have been received from Deputies John O'Mahony and Terence Flanagan.

The purpose of the meeting is to discuss with representatives of the Commission for Communications Regulation, ComReg, the proposal by Eircom to reduce its wholesale line rental charges and ascertain whether such a measure would impact negatively on rural customers. On behalf of the joint committee, I welcome from the Commission for Communications Regulation, Mr. Kevin O'Brien, commissioner, and Mr. Donal Leavy, director of the wholesale division.

By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of the evidence they give this committee. If a witness is directed by the committee to cease giving evidence on a particular matter and continues to so do, the witness is entitled thereafter only to qualified privilege in respect of his or her evidence. Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given and are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise nor make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. I advise witnesses that any submission or opening statement they have submitted to the joint committee will be published on the committee's website after this meeting. Members are reminded of the long-standing parliamentary practice that they should not comment on, criticise or make charges against a person outside the House or an official by name or in such a way as to make him or her identifiable.

I invite Mr. O'Brien to make his opening statement.

Mr. Kevin O'Brien

I thank the Chairman and members of the joint committee for an opportunity to discuss with them some of the specifics of the broadband market in Ireland. I am joined by Mr. Donal Leavy, who is director of ComReg's wholesale division.

The wholesale division is responsible for implementing specific regulatory measures that enable or help develop more competition within various parts of the electronic communications sector. We are happy to answer any questions members may have about the matters raised and look forward to the discussion.

ComReg is the national regulatory authority for the electronic communications and postal sectors. We were established in 2002, taking over the functions of the Office of the Director of Telecommunications Regulation, which was set up in 1997. ComReg also manages Ireland's radio frequency spectrum and the national numbering resource. We also regulate the emergency call-answering service, among other activities. We have a committed and hard-working team of highly experienced individuals.

Our overall responsibilities are to promote competition, inform consumers and encourage innovation. Members may recall that ComReg recently held a successful auction of radio spectrum for next-generation mobile telephone licences. This will raise €854 million for the Exchequer between now and 2030. The auction also will allow mobile companies to roll out high-speed, fourth generation mobile communication services later this year. Arising from this auction, €450 million of auction fees were forwarded to the Exchequer last December.

Under the 2002 Communication Regulation Act, ComReg is responsible for promoting competition within the electronic communication sector. We focus on ensuring that users derive maximum benefit in terms of choice, price and quality, that there is no distortion or restriction of competition, that efficient investment in infrastructure occurs, that innovation is promoted, and that we have efficient and effective use of the radio frequencies. The way we regulate is very much defined in European and Irish law, with a significant role played by the European Commission under the relevant directives.

The provision of competitively priced broadband to businesses and consumers, capable of supporting a range of new applications, is essential to Ireland's economic recovery. It will help ensure that Ireland remains an attractive location for new investment from both foreign and domestic sources.

There have been a number of positive signs of progress in recent years, with strong competitive forces and consumer emphasis on value putting downward pressure on prices while quality and coverage levels have improved. ComReg's regulatory interventions in regard to wholesale broadband have helped to stimulate such competitive pressures and ensure new investment.

As a result of the regulatory and business environment, the telecoms sector in Ireland today is making investments of approximately €1 billion in next generation broadband and fibre networks. These networks will deliver speeds of 30 to 150 Mbps to Irish consumers. Broadband adoption has continued to grow in recent years, as have broadband speeds. That has been driven in part by user demand for video consumption and other content services such as gaming and social media networks. There are currently 1.6 million broadband customers in Ireland, and an estimated 65% of Irish households have chosen to purchase broadband.

Outside the regulatory framework, there have been a number of State-sponsored programmes in the past decade. More recently, the national broadband scheme was completed in October 2010 at which point additional broadband services were made available in more than 1,000 electoral divisions across every county in the country to ensure national availability of broadband.

Following the national broadband scheme, the Government recently rolled out the rural broadband scheme to provide broadband to any remaining individual rural premises not capable of getting the service from existing providers.

Last August, the Government published its national broadband plan, which charts progress made to date in achieving the EU digital agenda targets and sets out steps to ensure the country exceeds the targets set for both 2015 and 2020.

With regard to broadband speeds, it is worth noting that higher speeds are being achieved. Approximately 74% of all broadband subscriptions are in the 2 to 10 Mbps category, while 21% are greater than 10 Mbps. ComReg will shortly roll out a new initiative in regard to advertised speeds whereby we will launch an online facility allowing for the measuring and publishing of broadband speeds experienced by consumers using different platforms.

Our analysis of the market reveals that, increasingly, customers are purchasing several services as part of a single bundle. Products offered as parts of bundles include fixed phone, broadband, TV and mobile phone services. The most common bundle purchased is fixed phone and broadband.

Competition in the sale of those bundles is strong, and consumers gain from that through better offerings and lower prices. The strength of the bundles market can be seen from the recent entry of Sky, with an offering that includes satellite TV, broadband and voice. That is in direct competition to UPC, which offers the same bundle but over their cable platform.

It is useful at this point in our introduction to describe the platforms used by Irish customers in obtaining broadband. Members received a submission from us in advance of today's meeting, and I would direct them to charts 3 and 4 on page 3 of that submission. These are two charts from our quarterly reports. The most recent quarterly report was published yesterday therefore, these are up-to-date figures. They report on the final quarter of 2012. On the top chart, chart 3, members will see a number of different platforms identified whereby Irish consumers obtain their broadband service. If I start at the bottom, members will see the dark blue area, which is DSL. DSL is the Eircom copper network with which we are all familiar. DSL is the way we get broadband through that. It is the biggest source of broadband for Irish consumers. The cable network is shown in green. Members can see that, quarter on quarter, the number of subscribers using cable to get broadband is increasing. The grey area is fixed wireless access. This is a spectrum based service, which ComReg introduced targeting rural areas in particular six or seven years ago. While numbers using that platform have declined, it is still a very important platform, particularly in the more rural areas. Detailed in red are smaller but important services across satellite and fibre direct into houses. Outlined in light blue is mobile broadband, which has been a significant means of getting broadband to more rural areas in Ireland. Members will see that over 500,000 people avail of mobile broadband.

The second chart breaks down the DSL group, and it is important for today's discussion to mention that. In chart 4, the dark blue area is where Eircom provides broadband to its own customers on its own network. The green area is where other operators such as Vodafone, Sky, UTV or IFA resell Eircom products to consumers but using the Eircom network. In that case it buys a wholesale product and then resells it under its name, but it is on the DSL Eircom-owned copper network.

The final category is what we call local loop unbundling where other operators have effectively taken control of that last part of the Eircom network. They have invested in the exchanges and can innovate to a greater extent, and offer more variety. Rather than being just a resell, it is a reuse. It is important to explain the way in which people currently receive broadband.

I will refer briefly to two recent regulatory decisions ComReg has made. These relate to next generation access and the bundles I have described. competition.

The next-generation access decision provides a regulatory framework for next-generation broadband in Ireland that will facilitate investment and the promotion of competition. The bundling decision ensures that other operators can effectively compete with an Eircom bundle so they can sell the products they buy from Eircom without being squeezed out of the market by the latter. Both decisions were notified to the European Commission. ComReg took the utmost account of all comments received in consultation.

Subsequent to these recent decisions, Eircom announced that it would provide a €3 discount on wholesale line rental that all operators could avail of from the date of Eircom's NGA launch, where wholesale line rental is purchased with another wholesale service from Eircom which enables the operator to provide broadband to consumers. Put simply, wholesale line rental is a wholesale service provided by Eircom that allows another operator to provide services over the phone line. ComReg welcomes the Eircom wholesale line rental discount announcement. The discount applies for a period of 18 months. ComReg considers that Eircom's proposal gives certainty to operators regarding their wholesale input costs from Eircom and ultimately allows for the prospect of faster broadband services to consumers without the need to increase retail prices.

The wholesale line rental discount is also available to operators who purchase next-generation-access-enabled broadband wholesale services. Eircom has announced it is investing €400 million in its fibre infrastructure, which will result in the making available to 1.2 million premises of next-generation broadband, delivered over five phases. In practical terms, it should mean that a significant number of households and small businesses get access to fast broadband services, in most cases with a choice of provider. In conjunction with the wholesale discount, ComReg hopes that the next-generation access deployment will further stimulate competition in the market and ultimately lead to better services for consumers at higher speeds and lower prices.

It is important to note that there is a significant distinction between retail line rental and wholesale line rental. Retail line rental is provided for under the universal service obligation regime put in place by ComReg and ensures that fixed-line telephone services are available to end users at the same standard price everywhere in the country. Retail line rental is the flat monthly fee paid for by consumers to access the telecommunications network so that they can receive and make calls on their fixed telephone lines. I emphasise that this nationally averaged universal charge applies to all consumers, urban and rural, regardless of location, and there are no plans for this price to change.

Broadband availability has grown significantly in recent years and the further rolling out of more next-generation broadband is crucial to our economic recovery. ComReg takes measures aimed at stimulating competition within the marketplace to enhance the roll-out of next-generation broadband and to encourage competition.

With regard to claims about line rental, I am happy to emphasise to members that there is no retail line rental price differentiation between urban and rural areas, nor is there any proposal to amend the relevant legislation. We will be very happy to take questions and discuss these issues.

Chairman

I thank Mr. O'Brien for his very detailed overview and clarification. Is he saying the accusation that there is a difference between rural and urban charges is unfounded? Can he clarify that fully for the committee? This meeting was called because allegations were made.

Mr. Kevin O'Brien

One of the directives we work under is the universal service directive, which enables ComReg to designate an operator as the universal service provider. Down the years, that has always been Eircom. It is currently designated. Part of the universal service obligation is to provide a fixed-line service at a nationally averaged single price to everybody in the country. That is what happens and what will continue to happen. Regardless of where one is in the country, if one obtains a fixed line from Eircom for one's house or business, there is a standard rate available. What has changed is one of the fees that Eircom charges other operators that resell its products. There is a large list of fees that Eircom charges to companies such as BT, Sky and Vodafone, which resell its services. These charges relate to leased lines for big business, the reselling of basic broadband products and all sorts of different products.

Eircom is subject to economic regulation whereby we ensure that where it has a very strong position, it does not overprice. We must also ensure it does not underprice to cut out competition. When it sells products to other operators, we put in place regimes that ensure there is a sufficient difference between the Eircom retail price and the other operator's wholesale price so the latter can run a business and have scope for a markup.

Chairman

Does that mean there can be a price differential?

Mr. Kevin O'Brien

The best way of describing it is that while Eircom might sell something in the market for €50, for example, it must sell it to another operator for €30, for example, so the other operator can then sell the product at a retail price of €40 or €50. There are many prices at which Eircom must offer its products to other operators. The change is in relation to one of those prices, in the context of Eircom's rolling out of next-generation broadband. Since Eircom is constrained ultimately by the price at which it sells to other operators, it needs to reduce the price in this context so it can sell competitively in respect of the next-generation access products.

Deputy Michael Moynihan

I thank the Chairman and welcome the ComReg representatives. On the last occasion the regulator was present, we were given a presentation that was written in gobbledygook, and I said that at the time. I compliment Mr. O'Brien on using understandable English for the layman on this occasion.

I am concerned about the answer to the Chairman's question. Rural people have contacted us stating telecommunications services can be offered at a charge above the rental price for the urban market. The purpose of this meeting is to obtain a very clear "Yes" or "No" answer in that regard. If memory serves me correctly, Regulation No. 41 of 2001, written by ComReg, gave the opportunity for bundles to be sold at a lower rate to urban centres with large populations than to rural dwellers. Does the regulation allow Eircom services to be offered to rural dwellers at a higher rate than the rate at which they are offered to urban dwellers?

Mr. O'Brien stated that line rental charges must be universal, but that is not the practice. Organisations representing rural communities have contacted all Oireachtas Members asking that this be highlighted. It was highlighted by some of the organisations representing rural communities nationally. Is there a regulation allowing a higher price to be charged to rural dwellers as opposed to urban dwellers?

Is it the practice, as I believe it to be, that they are being charged a premium rate, as opposed to the urban dwellers? Is some other regulation available ? In response to the Chairman's question, Mr. O'Brien outlined there was a market, that ComReg has a specific universal regulation and then it is changed when it goes from wholesale to retail and so forth. Is something in place that clearly gives evidence that rural dwellers are being charged a higher rate than their urban counterparts?

Mr. Kevin O'Brien

I will revert to the primary protection that is there for all consumers in the country regardless of where they live, which is the universal service obligation. It guarantees that the retail price is the same for absolutely everyone in the country. It also guarantees access and if the cost of building to a house located in a particularly difficult location is anything up to €7,000 of additional cost for Eircom or whoever is the universal service operator, that company must meet the cost. There are quite strong rules in place that guarantee one will get a fixed line no matter where one lives and guarantee that its price, which is around €25, is the same for everyone. In that regard, the cost to Eircom of providing a copper line in an urban area could be quite low, let us say it is €5, while in an extremely rural area, the cost could be €50 or €60 or more. Consequently, by having a single national price, the urban population in some cases probably is subsidising the rural cost. This is something that occurs across all types of utilities and there is a similar approach in respect of energy networks. This standard national cost is a guarantee to everyone and as I noted, there is no plan to change this. It is something valued at a European level as well as at a national level.

If I come to the price change, which I think has led to this debate, members should imagine a scenario in which Eircom has not yet started to build its next-generation network, which it actually is building as we speak. Perhaps I should explain what it is building. At present, in the main, one has copper wire from an Eircom exchange to a house. That copper wire usually extends to a cabinet somewhere on the edge of a housing estate or a road and then from that cabinet, it continues to individual houses. At present, Eircom is laying fibre from its exchange to the aforementioned cabinet. In a sense, it is going halfway to all the houses with fibre-optic cable, which is a much better and faster way of providing broadband. It is doing this by starting with urban areas but with an announced target of reaching 1.2 million houses. As it does this, it needs to sell this new product, will have higher speeds and will compete a lot with UPC, for instance, which already offers high speeds in a lot of the country. In order to compete, Eircom must be able to reduce its retail prices for this product against what they may have been. If Eircom reduces a retail price, to maintain that space in which other providers that buy its wholesale product can compete against it, it must also reduce wholesale prices. We regulate it in order to keep those two things going together, that is, to keep open that economic space for someone else to be able to make a buck. What is happening is that Eircom has chosen basically to drop both of those levels in order that its new investment can be sold in a competitive way as it rolls out across the country. Inevitably, Eircom is building that new infrastructure in urban areas first and therefore, this service will arrive in urban areas first. A major challenge for us all is to try to make sure it goes as far as it can. That is the pricing change that has happened in this case. It really is about what Eircom charges others and the indications that has for Eircom's retail prices itself.

Chairman

Does that clarify the point for Deputy Moynihan?

Deputy Michael Moynihan

Yes.

Deputy Dessie Ellis

I thank the representatives of ComReg for everything. The big issue obviously is that of the fixed line charges. While Mr. O'Brien stated there is a universal service guarantee at present, he has outlined that as competition increases, there will be possible threats to this in the future. This is feared by a lot of people in rural areas, particularly, as Mr. O'Brien has mentioned, if the fibre-optic cables initially are to be rolled out mainly in urban areas and subsequently into the rural areas. Is there no way we can insist it is rolled out into the rural areas? Can ComReg make a demand that if one intends to roll out fibre-optic cables in urban areas, it should be done at the same time across the board?

I am aware that UPC upgraded a lot of its infrastructure a few years ago and probably is ahead in many ways. However, Mr. O'Brien might outline to members in general terms the present position of the 4G roll-out. Obviously, a great number of jobs can be gained on foot of the extra speed and capacities arising therefrom. Can Mr. O'Brien indicate what that might mean or whether ComReg has a forecast regarding the types or number of jobs it would create? Is there any way to gauge this?

Mr. Kevin O'Brien

The Deputy's questions pertained to the fixed line networks, the UPC and Eircom roll-outs and then to 4G and I will answer them in turn. The way that ComReg and the regulatory framework are set up is one starts off with a marketplace. ComReg does not design that marketplace but comes and regulates that marketplace as it finds it and tries to deal with problems within it. Ultimately, Eircom and UPC are free to deliver services as they see fit, to develop their business plans and to compete in a liberalised marketplace. Our job then is to ensure that any distortions or blockages to competition are taken away and that it is a fair place for competition and investment. For instance, in the case of UPC, its network passes over 700,000 households, while that of Eircom, as I stated, goes to every house in Ireland with the telephone line. However, its announced plan is to hit 1.2 million houses with this new next generation access, NGA, broadband. We intervene in a way that tries to maximise that investment and to maximise the competition that leads to this investment. However, we have no powers to direct people to build and provide service, with the exception of the aforementioned universal service obligation, which pertains to the fixed line. However, it is not a broadband service. There has been debate in Europe as to whether the universal service regime should specifically mandate broadband and that broadband should be something that everyone must receive through this regime. In Ireland, we are of the view that the national broadband scheme I mentioned, which the Government ran a couple of years ago, had a target of giving broadband to everyone in Ireland and the indications are that this target was met. I acknowledge that many people in the more rural areas were receiving mobile broadband.

The Government subsequently ran the rural broadband scheme which was a mopping-up exercise to find out if there was anybody who could not get service. About 4,000 or 5,000 people said they could not get a connection and effectively the Department did a matchmaking exercise with operators who said they could provide a service, many being satellite or wireless operators. It was reported that four people could not find an operator and there has been some intervention there. Because of these interventions it would appear that everybody in Ireland can get that basic level of broadband so the need to change universal service to mandated is probably not required but it is something that everybody will continue to look at. The challenge is to give everybody not one or two megabits but to try to give everybody in the country 30 megabits, which is the Digital Agenda target in Europe and is also the target the Government has put out in its new national broadband plan from last summer. We are all focused on trying to achieve that target. ComReg can do it by allowing the market go as far as it can and the Department has announced that it is prepared to intervene and put in public funding for that last piece. That is the fixed network piece in the main.

On the fourth generation roll-out, we completed our auction in that regard last November raising in the region of €850 million for the Exchequer. Four operators were winners in that auction. Those operators have all bought spectrum at different parts of the band. In summary, those licences run until 2030 - there are two periods - but in the main there are licences until 2030. Those licences permit the operators to launch fourth generation services where, on average, there will be much higher speeds to one's mobile telephone or tablet. The coverage obligation that we have put in place is a minimum of 70% within three years. We did this, noting that many of the operators, in terms of telephony coverage are already up around 99% and the expectation is that they will replicate and compete on coverage, as they have done in the past.

As to when the operators launch that service, that is their business but they have paid for that spectrum in order that they can launch that service. We would expect that as soon as they are ready, they will be in the business of offering fourth generation services and no doubt advertising heavily as they do that.

Deputy Noel Harrington

I apologise for missing the presentation but I have read it. I refer to the decision to allow Eircom to charge different rates for urban and rural areas. I strongly believe that communications technology will be market led but not solely market led. Otherwise there would be no need for intervention by the regulator. Eircom is the universal service provider. Which part of the universal service is being ditched here? To which part of the obligations set out in legislation are we saying "no"? In other areas, where there is a universal service obligation, for example, in An Post, which is not meeting its targets, a different forum will be used to encourage and force it to do so. In the legislation passed almost two years ago to deregulate much of An Post's operations, one of the keystones was the universal service obligation on that company. It is difficult to see how we can chip away and essentially make fish of one and flesh of another in terms of an obligation.

I welcome ComReg's work in delivering higher speed next generation broadband and the 30 megabits as standard in the Digital Agenda. I understand that not everybody will get this in the short to medium term. It is an expensive roll-out. There are minimum standards as set out in the presentation. I have seen this in west Cork and particularly in Bantry and peninsular areas. Amazon has come in and created 26 jobs where I live. It is extremely significant to provide back-up support to a company such as Amazon. Regrettably, people have lost those contracts because we could not get five megabits. We need to anchor down the idea of a universal service obligation. I am concerned at the hard decisions the Oireachtas has taken in regard to An Post and other areas. The decision to allow Eircom discriminate against other areas because it was more expensive to provide the service is a dangerous road to go down. I am not happy with it. Why do we have the regulation in the first place? We can go 100% to the market and satisfy many people in the country or we may not. There is a reason for having regulation. This is a fundamental one and I am concerned at how that decision was allowed.

Deputy Ann Phelan

The question I wish to ask is about the roll-out of broadband. Even though we say we are providing it to the rural areas, it is not whether one can get broadband but the quality of the broadband one is able to receive. What is ComReg's role in the quality of broadband that people receive?

Deputy Tom Fleming

I agree with other speakers on the urban rural divide in respect of the provision of broadband services. What is happening under the watch of ComReg is anti-rural. We are well aware it is a Third World service in many rural areas. It is discriminatory, anti-business and anti-education for the youth of rural areas. I find it hard to fathom some of the statements made at the committee today.

I am trying to comprehend a reply to a parliamentary question I received from the Minister for Communications, Energy and Natural Resources, Deputy Pat Rabbitte, which states that in early February, Eircom's greater flexibility in setting wholesale rates for bundle services offered to its competitors a telephone exchange where there is already active competition among service providers or exchanges where next generation access services are available. It also states that the retail price for basic fixed line telephone services alters, as a consequence of the decision, or remains at the standard price across the country in line with Eircom's universal service obligation. I believe this is a dereliction of duty by the regulator in regard to this matter. I am aware that only a limited number of exchanges have been provided with the upgraded service in rural areas and only for a distance of 5 km or 6 km on the main telephone wire. There are hundreds of thousands of people who are deprived of their rightful entitlement.

I find the response regarding the efforts being made to roll out next-generation broadband to the whole country difficult to comprehend. We are living in the real world and are well aware of the fact that our constituents are not getting the broadband service they are supposed to be getting. There are serious issues with regard to speed and the general quality of the broadband service. This is having a negative effect on those trying to maintain their livelihoods or to expand their businesses. It is having an impact on many people in rural Ireland, including farmers, for whom farming is a business that requires up-to-date technology. It is good that this committee is focusing on this issue and I hope that ComREG will accelerate the process of ensuring a balanced provision of broadband services.

Mr. Kevin O'Brien

I shall take those questions in the order in which they were asked. On the point made by Deputy Harrington, the universal service regime for telecommunications is not changing and there is no ditching of any element of it. That regime, set out in European law and implemented by ComREG in Ireland, results in the designation of Eircom as the provider of fixed-line telephone services for everyone at the same price, regardless of location. I can assure the Deputy that there is no change at all in that regard. What we were discussing was the price of certain wholesale products in the context of Eircom launching its new, next-generation service. The company sells wholesale products to other telecommunications operators and needs to sell them at a price that allows the other operators to resell them and still make an acceptable return. That is where the change has happened - in the wholesale rather than the retail price. Nothing at all has changed with regard to universal service provision for telecommunications.

Deputy Michael Moynihan

Would Mr. O'Brien agree that, ultimately, Eircom will benefit from this? It is like something coming through the back door. There is the wholesale price, an operator in the middle and the consumer at the end. That opens the door for any universal service provider to do the exact same thing.

Mr. Kevin O'Brien

No, I would not agree because the retail price of approximately €25 for a fixed line anywhere in Ireland remains unchanged. If Eircom reduced or increased that price it would have to do so for absolutely everyone in the country. We are never afraid to take compliance cases with Eircom if we need to. The wholesale price change relates to Eircom's roll out of its next-generation service and the fact that it needs to reduce its prices in order to be able to compete with the likes of UPC. It needs to be able to reduce its wholesale prices so that other operators can compete with it. That change is happening and is something that ComReg welcomes but it is not a change that we have approved. It is within the rules of regulation under which Eircom operates.

Specific reference was made to Amazon. We have an ongoing dialogue with the IDA and larger businesses, rather than availing of the residential-type broadband services in Ireland, tend to avail of leased line services and more bespoke services. Ireland has a good record in terms of the price, availability and quality of those big-business services. However, where there are any specific issues, we are always happy to talk to the IDA and other industry representatives.

Deputy Phelan made reference to quality and that is certainly one of the big issues vis-à-vis broadband. As I explained earlier, it is a reasonable presumption that broadband is now available to everybody in the country but in a lot of cases it is at very low speeds. The problem is how to ensure that we get higher speeds and a very reliable service for everyone. The solution is always a mixture of technologies. Where people can avail of fibre and cable networks, the platforms are upgraded. Fourth generation mobile technology will also help. The fixed wireless access service I mentioned earlier has also been important in this context.

A lot of what we do in ComReg on the consumer side focuses on transparency. We have a website, callcosts.ie, where people can input information on their location and their telecommunications needs. They are then given information on the service providers in their area and the speeds and prices on offer. I mentioned that we are starting to put together a broadband speeds pilot scheme where we will have people around the country sampling products in their local area and reporting to us on the real experience. Obviously, there is often a difference between the advertised speed and the real experience. We want to get some genuine user experience data that we can make available to the public.

Deputy Ann Phelan

How would a person apply to take part in that scheme?

Mr. Kevin O'Brien

An external provider is setting up the scheme for us and that entity is responsible for putting together the sample, which needs to be an appropriate size with an adequate geographic spread. I can discuss this further with the Deputy after the meeting and would be happy to provide her with the specifics on the scheme. It is very important for us that the sample is correct, accurate and reflects the real experience. That is a new project for us. We have also had discussions with the Advertising Standards Authority of Ireland, ASAI, about the advertisement of broadband speeds. A number of years ago the authority set out guidelines for telecommunications operators and their broadband advertisements so that the operators would not exaggerate the speeds available in their advertisements. The operators have been directed to indicate speeds at busy times rather than in the middle of the night, for example. We have done a lot of work in that space.

In response to Deputy Fleming's contribution, I repeat what I said to Deputy Harrington, namely that there is no change in the retail price for a fixed line in Ireland. The universal service regime applies fully. We are fully aware of the need to try to drive telecommunications investment out as far as we can into more rural areas and we are very aware of the value of these services to rural communities. Everybody needs high-quality telecommunications services in this day and age. We do our best to regulate the market in a way that pushes service provision out but for that last leg or piece of the picture, the Department of Communications, Energy and Natural Resources engages in public interventions, as is the case across Europe. We try to minimise the piece that the Government needs to fill in.

In the context of universal service, we insist on high-quality standards from Eircom. We have put in place a performance improvement scheme with the company, whereby it is expected to achieve certain metrics, year on year. As an example of this, Eircom had obligations last year with regard to fault repair, whereby it had to repair 80% of all faults within two days.

While Eircom achieved most of the targets we had set, this was one it did not meet. We applied a penalty of €225,000 in respect of fault repair which it paid over to us at the end of last year. We have this performance improvement regime in place for universal service and where Eircom does not match up, we apply penalties to the company. It is a regime that is in place to try to improve the quality of universal service provided everywhere in the country.

Deputy Noel Harrington

Does ComReg have more forensic figures to show where Eircom falls down on fault repairs?

Mr. Kevin O'Brien

The figures are as reported and independently audited. We publish the details of national figures and a long information note is published by ComReg on an annual basis. I will happily send the details to the Deputy. We can see how much more we can get into what lies behind it, but, in the main, it relates to the rates of connection, fault repair, etc. throughout the country. The universal service is for everyone throughout the country.

Deputy Joe McHugh

I welcome the delegation. I have some questions and will try to be as specific and brief as possible.

As the delegation is aware, in 2013 the charity sector and mobile operators launched a mobile text service to ensure 100% of donations would go to charity. This was most welcome and I acknowledge it. Why does ComReg require charities to obtain a premium rate service licence when they do not appear to come within the definition of premium rate provider under the Communications Regulation (Premium Rate Services and Electronic Communications Infrastructure) Act 2010? The specifics of the legislation point out that it must apply to an organisation or an individual that gains, but I do not believe charities are in the business of gaining, rather they are in the business of engaging in more altruistic work.

Does ComReg monitor the volume of text messages sent to television and radio programmes? Does it have the capacity to do this or can it provide relevant information in this regard?

There is very good fibre optic communications broadband infrastructure in the north west, namely, Project Kelvin. It extends from North America to the north west and includes Coleraine, Strabane and Letterkenny. The project is remarkably beneficial to a town such as Letterkenny. However, there is a geographical region, the Inishowen Peninsula, which is larger than County Louth and has a larger population than County Leitrim. There is concern among the people living on the peninsula that they are being put at a comparative disadvantage as a result of the lack of connectivity. Is ComReg aware of this? Does it believe the people living there are being put at a comparative disadvantage from an industrial investment point of view? Does it have plans to address the issue?

There is a specific issue in Cornagill, outside Letterkenny, where there is a household that cannot avail of broadband service because it is at the critical four-mile point. I will submit the specific information to ComReg and I am keen for the delegation to follow up on it.

My final question relates to the methodology used by ComReg. Some years ago I sat on the joint committee which was responsible for dealing with telecommunications issues. At the time the methodology used in measuring mobile phone coverage involved a person getting into his or her car and driving along the national primary routes. Is that methodology still in vogue? The reason I ask is that in a county such as Donegal, especially on the Inishowen Peninsula, there are few, if any, national primary routes. The eastern side of the Inishowen Peninsula is a disaster for mobile phone coverage. There are places in my neck of the woods where one can drive along scenic routes from Mulroy and the Fanad Peninsula to Milford or Carrigart, but there are no national primary routes. Is that methodology still being used and, if so, what plans does ComReg have to ensure it will measure mobile phone coverage in a more comprehensive and equitable manner for regions that are not near national primary routes?

Mr. Kevin O'Brien

I thank the Deputy for his questions, the first of which was related to what we call the premium rate services sector. I will provide a brief explanation of the history. Premium rate services involve buying and paying for a service through one's telephone bill. The costs appear on the bill, whether it is for a mobile or fixed telephone. For many years this service was regulated by an industry funded group called Regtel. Following on from the 2010 legislation the duty was given to ComReg to regulate this area. The Act is specific in terms of ComReg's duties and how a premium rate service is defined. We have no scope to escape from the definitions set out in the Act. Following the enactment of the legislation, ComReg sought to put in place a code of practice to protect consumers. ComReg has approximately 33,000 consumer contacts per year. By contact I mean an issue a consumer brings to our attention. Of these, approximately 21,000 or 22,000 relate to communications services, while more than 10,000 relate to premium rate services. It has been an area in which there has been significant confusion and upset has been caused to consumers, in particular in cases in which consumers believed they had not subscribed to a service but in which they had found that amounts of money were being added to their telephone bill.

ComReg introduced a code of practice in this area and several providers of premium rate services took legal proceedings against it because of the premium rate service regime. The cases were taken not only against ComReg but also against the State, the Minister, the Government and the Attorney General. I am pleased to report that these proceedings have come to a conclusion and a code of practice is being fully applied. We have taken several compliance actions against premium rate providers in cases in which, in effect, consumers were not being treated appropriately under the code.

The Deputy mentioned a specific issue affecting charities. ComReg must examine each premium rate service on its merits. We will apply the legislation and the code in the normal way with regard to the issues mentioned by the Deputy. That is the general approach we must take. Regardless of who is advertising, whether it be a business or a charity, it is important that the consumer who is the subject of the advertisements receive correct information and that the advertisements not be in any way incorrect. I have no wish to comment on a specific case, but we have this code of practice on which we publicly consulted and we apply it to everyone equally and fairly.

The Deputy asked whether we could monitor the volume of premium rate service texts. Our quarterly report publishes the total number of texts sent in Ireland. It is a vast number, approximately 3 billion per quarter - I believe we are the most active texters in Europe. We do not have information on the number of texts sent to premium rate service providers, as that is their business and so on. However, we monitor the adherence of premium rate service providers to the code of practice.

I understand Project Kelvin has been delivered by the Government working jointly with the Government in Northern Ireland with EU funding support.

I absolutely agree that these types of international broadband connectivity are vital. The first big one in Ireland was the global crossing network, about ten or 11 years ago. It is vital that the country has these connections. The next big question is whether other areas in the country connect back. Do they have backhaul to the point of international connection? A key issue for an area like Donegal would be whether other operators, such as BT, Eircom or ESB are connecting back to Project Kelvin and bringing that connectivity into the area. I do not have specific information about where Project Kelvin goes. It was a matter for the two governments and not for ComReg.

Deputy McHugh mentioned issues regarding certain parts of Donegal. If we talk afterwards, we can get that detail from the Deputy and follow up with operators to see what the specific issues are.

Deputy Joe McHugh

There was joint North-South and EU funding but ComReg is, nevertheless, a communications regulator. While the regulator may not have had involvement in the design and construct of the project, surely the service that is available now is the responsibility of the communications regulator. I appreciate Mr. O'Brien saying we can talk about the matter after the meeting, but ComReg has a responsibility to monitor what is available or not available, irrespective of who provides it or funds it.

Mr. Donal Leavy

If I could comment on Deputy McHugh's query, we are talking about high-speed business capacity. We have a role there at the wholesale level. It is a wholesale regulatory format. We liaise with Enterprise Ireland and the IDA from time to time. It is a long time since we encountered any complaints from businesses that they could not get this type of connectivity. I am not aware of any issues in Donegal, which is not to say there is none.

Deputy Joe McHugh

Has ComReg had no complaints from places like Buncrana, where the issue has been raised publicly and at town council level?

Mr. Donal Leavy

Residential broadband is an issue we have talked about. We have not had complaints about high capacity business services, of a gigabit and upwards. When we talk to Enterprise Ireland, it says this is not a problem for it in marketing us externally.

Deputy Joe McHugh

Can Mr. O'Brien and Mr. Leavy take my contributions to this meeting as formally raising the issue with ComReg? I ask them to contact Donegal County Council and Buncrana Town Council because this is a live issue in that region. I ask them to respond to those bodies.

Mr. Kevin O'Brien

Deputy McHugh asked about the road test methodology. We have had that methodology for a number of years. The mobile phone operators have obligations attached to their licences. We have always tested to see if they have met them. We required them to sign bonds and they received money back only when they had met roll-out obligations. They always met those obligations. We are expanding that methodology. It will encompass all national routes. I can give Deputy McHugh the detail on how we are expanding it so that it will cover more than it did in the past. The methodology was sufficient and appropriate in the past to determine whether coverage was being met, and that was the case.

Deputy Noel Harrington

Could I have clarification of the charities issue and the 2010 Act, which was raised by Deputy McHugh? Does the Act differentiate between charities and for-gain organisations so that charities do not have to go through the same process as for-gain companies and organisations?

Mr. Kevin O'Brien

There are many charities and many types of businesses. The Act is written in a very general way. The code of practice on which we are consulted and which we apply is more specific. Each case is different and it would not be appropriate for me to comment on specific details. The Act allows no broad exclusion of charities from appropriate regulation regarding premium rate services with which they might be involved. This is a good route for charities. Many charities throughout Europe raise money this way. It is something we would like to see flourish. Of course, we need to apply the code in an exact way to each specific example.

Deputy Noel Harrington

There is nothing exact in the legislation but the ComReg code of practice is specific. Charities must jump through the same hoops as for-gain companies. Is that the case?

Mr. Kevin O'Brien

The legislation is what guides our code of practice. The code is the implementation of the legislation. Regardless of what type of business is in place, the consumer at the other end needs appropriate protection. I am reluctant to take a specific example without exploring incredible detail on it. We need to ensure there is appropriate protection for the consumer. No general opt out for charities is allowed for under the legislation.

Deputy Joe McHugh

I appreciate that ComReg must consider the possibility of court proceedings, for example. However, the definition in the Act of a premium rate service provider is "one who does any of the following for gain". Charity organisations are not for-gain organisations. There is a grey area, on which legislators need help. I am asking ComReg to liaise with the committee and give a comprehensive analysis of that definition.

Mr. Kevin O'Brien

I would be happy to write back to the committee on that. With any premium rate service, whether for charity or otherwise, there are usually four or five people in the chain. There is the telecoms network, which is usually defined as a premium rate service provider, there is often an aggregator who runs the platform that produces the content and then there is the original creator of the content, the offering or whatever is coming through on the service. There is usually a complicated chain of operators and different people gain in different ways along that chain. Each is a specific example and there is a specific application of the concept of for-gain to each example. No category is exempt from regulation. We need to look at each case on its own, with many people in the chain and not just one entity.

Chairman

Thank you, Mr. O'Brien. Members of the committee can chat to you after the meeting if they need further information. I can tell that Deputies McHugh and Harrington are anxious to ask more questions on this issue.

Mr. Kevin O'Brien

In the past, ComReg has asked members of joint committees to visit us in our premises. I find some of these issues complicated and detailed. It is always worthwhile spending some time talking them through. It is particularly useful to hear the experiences of Irish people with these services. The invitation is always there for the committee to visit us. We would be happy to take the time to discuss these issues in more detail.

Chairman

Thank you for that. We have a very full programme of legislative issues for the next while. I thank you, nevertheless, and we would like to take that opportunity at some stage in the future. Members of the committee would like to visit your premises. I speak on their behalf in accepting your invitation.

Thank you for what you brought to the committee today. It certainly brought some clarity. In your opening statement, Mr. O'Brien, you dealt with the urban-rural issue. Could you, however, write to the committee and confirm that there is no difference between urban and rural charges, just to formalise that position? That would help us in dealing with our constituents for whom the clarification is needed. I have no doubt the witnesses have dealt with it in the committee today but I would ask for that clarification in writing to the clerk who can distribute it to members. I thank you for your attendance.

The joint committee went into private session at 11.20 a.m. and resumed in public session at 11.30 a.m.