I thank the Chairman and members for the invitation to address the committee. We will outline briefly who we are, what we do and the context around the sectors we regulate. We will then look at this in terms of our effectiveness in regulating the sector, our efficiency, and our impact on the economy. Conscious of time, I will move on to the presentation proper.
Following the decision of the Houses of the Oireachtas, ComReg was established in 2002 and the Minister appointed a three-person commission. We regulate on the basis of both national and European law which sets out the framework in terms of what we have to do, the objectives and on what basis we operate. That framework is currently under review at EU level and we have been working with the Department of Communications, Energy and Natural Resources and the EU Commission in shaping the new EU regulatory framework.
Our main responsibilities in the electronic and communications and postal sectors cover the following: promoting competition and consumer choice; promoting the interests of end users and protecting and informing consumers of electronic communications services; promoting innovation and investment in the sector; promoting the efficient use of spectrum; and promoting the development of the postal sector.
ComReg has a complement of 120 people. It is made up of highly experienced and well educated individuals, including analysts, accountants, engineers, economists and lawyers. Approximately 90% of our colleagues have degrees or masters qualifications. They are mainly derived from the private sector because clearly the sectors we regulate are highly complex and highly dynamic ones. ComReg is split into four separate divisions, wholesale, retail and consumer, market framework and corporate services. ComReg is entirely industry funded and has made a significant contribution to the Exchequer every year since its establishment. ComReg has had its responsibilities extended over a period of time with no increase in its head count. This includes taking over responsibility for the emergency call answering service, ECAS, and for the .ie domain registry. We have increased our role in network integrity and security. We are shortly to take up responsibility for the regulation of premium rate services, PRS.
In terms of the sector we regulate, it is a pivotal one for the economy. It has a representative turnover between the postal and electronic communications of approximately €5 billion per annum. It employs close to 18,000 people directly. We have moved from a situation at liberalisation where we had one single provider to today where we have more than 50 active companies. In terms of investment in the sector, it is currently running at approximately €700 million per annum. Clearly this will be a challenge in the years ahead as CapEx constructions happen across the board. Many of the companies that are here are competing for investment in other locations. Vodafone has a footprint across the world. Ireland has to compete for that investment in this marketplace. Our estimate at the moment is that the overall sector will fall in revenue terms by approximately 4% to 5%. It sounds bad but when one looks at some other sectors it is quite a reasonable achievement. Clearly, however, no one quite knows what the overall impact may be if the recession continues. There is a likelihood of further consolidation in the sector judging by technology innovation, by the economic circumstances in which we operate and by convergence.
In the past five years there has been a significant increase in what we describe as multiple technology platforms. In the old days we had a simple telephone system. Today we have a range of technologies. In broadband, one can get broadband over one's fixed line, mobile, fixed wireless and cable. That is a very healthy position that the market has developed into. The development in convergence between digital platforms is a major technology trend that is under way. I think we will see much more of that. We recognise how pervasive the Internet has become and how it has become part of all our lives effectively in the past ten years. Investment in next generation networks, in fixed, mobile and cable, is one of the key future developments.
In terms of effectiveness of ComReg itself, there is a significant increase in cross-platform competition. There is certainly much more choice. There are 50 companies active in the marketplace. Prices have been falling and continue to fall. An example of that in terms of the mobile market is that the overall price basket has fallen from an average spend of approximately €53 on our surveys down to €42 over the last period of time. In broadband we now have more than 1.2 million subscribers. Informa, which is a large consultancy group, suggests that 62% of Irish homes now have broadband. In recent months ComReg has initiated a reduction in mobile termination rates which will benefit Irish consumers to the tune of approximately €100 million. Clearly that is a significant contribution in these very difficult times.
In terms of developing broadband further, one of the areas on which we have focused has been local loop unbundling because it provides the basis for more innovation in broadband, particularly in the fixed line market. In that area we have been looking at lower prices and enhanced offering. On the mobile market we have a situation here which is almost unique across Europe where we have four network operators and an MVNO operating in the marketplace. That has already fed in to enhance competition and lower prices. We have also been working on a reduction of wholesale prices to further enhance competition because it is our belief that at the end of the day enhanced competition is the best way of protecting consumers and getting lower prices. It has been said many times in the past that cable would some day take its place. It is fair to say that cable has now become a much more significant player in both the broadband and telephony areas.
In terms of spectrum we have approximately €3 billion contribution to GDP. Directly and indirectly it supports some 30,000 jobs. It is a clear advantage that ComReg sees in terms of this market that Ireland has plenty of spectrum availability, and we do not have many of the constraints that larger countries have that are part of mainland Europe in terms of defence applications, or constriction of use because of overlapping borders. This is a real opportunity for us in trying to position Ireland as a centre for research and development in areas such as radio spectrum. In fixed mobile and wireless broadband services, an initiative by ComReg to introduce fixed wireless local access effectively moved Ireland from a situation in 2002 where it had approximately 3,000 people on broadband paying €120 a month to a situation where it now has a market of more than 1.2 million. At that stage the incumbent was very reluctant to reduce prices and very reluctant to invest. The introduction of competition through the fixed wireless initiative changed that marketplace and has been one of the catalysts for where we are today.
We have been working closely with BCI, RTE and the Department of Communications, Energy and Natural Resources to enable timely introduction of DTT. Clearly this is a very important landmark which leads on to the second point which is that there is a once in a generation opportunity for Ireland to make use of the digital dividend as we move from analogue switch-off into the new digital environment. This can provide a range of products and services, particularly broadband for rural areas. This is a real opportunity and we must ensure that we capitalise on it.
We have raised the quality of universal service for all customers of Eircom and An Post. We have set mandatory new standards for Eircom's line installations, because we were not happy that the guidance we had provided was being adhered to, so we have put compulsory targets in place. We have focussed upon raising An Post's next day delivery record to meet the 94% target. I wonder if members noticed the report in the newspapers on the welcome improvement in deliveries in the Dublin area in the recent past. One of the key challenges in implementing best practice is that the operators must know what best practice is in their dealings with customers. We have been doing this through a range of initiatives, including the format of the bills, so that they are clear and consistent and presented in a way that people expect, and we have also improved the complaint handling and compensation from postal operators. We are strong in the belief that informed consumers are the best safeguards for driving competition and innovation.
We have developed two websites, www.callcosts.ie and www.askcomreg.ie which got 600,000 hits in 2008. We have also worked with the Citizens Information Board in an outreach programme. We do not sit in Dublin and tell everybody what we do. We were down in Moyross recently providing details of how people could look at ways to get better packages and how to understand their bills. We see that as a particularly strong initiative. We also believe that telecommunications service should be for the benefit of all and we have worked closely with the National Disability Authority, NDA, around the disability forum and trying to ensure that people with disabilities and the elderly have access to communications.
In terms of efficiency ComReg has a staff of 120 people. It is industry funded and makes a significant contribution to the Exchequer. We issue about 5,000 licences a year and we renew about 18,000 licences. We issue approximately 200 public documents, of which 20 are public consultation documents. In terms of the website visits, we get approximately 1.5 million hits each year. ComReg is accountable to three Oireachtas committee and its accounts are audited by the Comptroller and Auditor General. It complies with the Department of Finance code of practice for governance of State bodies and it publishes in advance its accounts and work programme as well as its annual report.
ComReg had an income of €46 million in 2008 and an expenditure of €22 million. As members may be aware, the excess goes back to the Exchequer, so there is no burden on the Exchequer. It is interesting that the ComReg levy on the industry of 0.2% has remained unchanged since 1997. When one compares the ComReg levy with its opposite number in the UK, O.2% is approximately one third of the levy placed on its industry. Before the changes came ComReg sought a 10% reduction in its overall spend in 2008. This is highly challenging as there are items which are outside its control, including legal costs where we clearly must defend our point should cases arise. We have also undertaken a recruitment freeze, while at the same time responsibilities for regulating the premium rate service and ECAS have been put in place.
ComReg is subject to very strict budgetary controls which are driven by the work programme. It is audited by internal auditors as well as the Comptroller and Auditor General. The external evaluation of ComReg's activities is carried out in several ways, by the audit committee, which has three external members including the chair, expert groups for the electronic communications and postal sectors and peer reviews by the European Commission and other NRAs.
Communications will continue to be a key sector in the economy. ComReg and regulation have an important role to play in advancing this digital economy. ComReg will ensure that key national assets, such as our radio spectrum will continue to be used efficiently and effectively. We see real opportunities in this area. ComReg is working with Government towards maximising the benefits of the digital dividend. We are trying to drive innovation through the spectrum test and trial licensing regime. My Commission colleague, Mr. Mike Byrne has just come back from Japan where ComReg worked with the Japanese government in trying to find an arrangement whereby we could see areas for mutual future development using spectrum and other means. Clearly investment in next generation networks, fixed mobile and cable will be a key benchmark in terms of the point to which we want to get in the future. It is very important from a ComReg perspective that it is not just a fixed line issue as it needs to include investment in the mobile and cable sectors.
The key challenges facing ComReg in 2009 is that clearly the country needs a competitive communications sector and ComReg will need additional investment in next generation networks, not just in fixed line but in dux 3 for the cable industry. We need it in LTE for the mobile industry as well as for the fixed line. ComReg will continue to work with the Government and other agencies to enable and facilitate innovation in the digital economy. There are real opportunities. Clearly we must keep consumers informed and protected in this increasingly complex world of converged products and service will be a challenge. We want to ensure the seamless transition of the new responsibilities we are given because some of these areas of responsibilities are outside our general scope of competence. Premium rate services is not an area where we have had an historic relationship, so clearly we want to make that as professional as we can. We are working with the Government, the EU and the industry in the lead up to postal liberalisation which must be in place by 2011. We are also preparing for the new EU Telecom Framework in 2010. The European Commission is constantly looking for appropriate efficiencies while we must execute our duties and responsibilities.