Communications
Overview
Telecommunications Market
The telecommunications sector delivers voice, video and data services to customers over a range of technology platforms including fixed wireless, mobile networks (using the radio spectrum), copper and co-axial networks, fibre and satellite.
The sector comprises telecommunications infrastructure, wholesale and retail providers. The infrastructure, wholesale and retail services market is dominated by a number of large international companies including Vodafone, O2, eircom (STT), “3” (Hutchinson Whampoa), BT and UPC. A number of State companies and agencies also own back-bone telecommunications infrastructure. Eircom is the most dominant player in the market, as demonstrated by the following table:
The December 2010 market report from the Commission for Telecommunications Regulation, ComReg, notes the following:
· Total revenues for fixed, mobile and broadcasting markets now stands at an estimated €3.84 billion per annum on an annualised basis.
· Mobile penetration rate stands at 116% with 5.1 million subscribers of which 65% are pre-paid subscribers.
· There were almost 1.6m active internet subscribers in Ireland of which 1.59m are broadband subscribers. This represents a growth of almost 13% over the last 12 months.
· There are approximately 1.5 million cable/MMDS and satellite digital subscribers. Digital households represent over 87% of all households with a television.
79% of homes and 83% of SMEs now subscribe to packages of between 2mbps – 10mbps. Speeds of “up to” 8mbps are widely available and speeds of up to 50mbps are available in some urban areas with (UPC) cable access which is now being upgraded to 100 mbps. Larger corporates can access broadband services with speeds up to and exceeding 1000mbps.
ComReg is currently studying means of bringing forward credible measurement of actual speeds provided by different service providers with a view to publication of actual performance as an aid to consumer information.
At the end of December 2010, the number of broadband subscriptions stood at 1.6m, an increase of 12.8% on 2009. Broadband subscriptions accounted for 96.7% of all subscriptions compared to 91.7% in 2009, and the per capita penetration rate is estimated at 35.6%. Fixed line DSL subscriptions account for 44.6% of subscriptions and mobile broadband accounts for 34.7%. Mobile broadband has grown significantly over the last number of years.
The graph below highlights the impressive take up of broadband over the last six years.
There is a continued trend of customers moving to higher speeds as illustrated by the following graph:
The graph shows that 81.8% of all broadband subscriptions are now in the 2mbps-9.99mbps category, while 8.5% are in the >10mbps category. Based on operator data ComReg estimates that approximately 15% of subscriptions in the >10mbps category are actually above 30mbps.
While data for international comparison purposes is published less often than national data and tends to lag somewhat, Ireland ranks around 20th out of 31 for broadband penetration (composite fixed and mobile), around 8th out of 28 for wireless broadband, and around 22nd out of 31 for fixed broadband penetration. While Ireland had been lagging behind EU and OECD comparator countries in recent years, the roll out and take up of mobile broadband has helped to improve the country’s international standings significantly and move Ireland beyond the EU average for composite fixed and mobile broadband.
Policy and Regulation
Since 1999, under the EU telecoms framework, the provision of telecommunication services, including broadband, is a matter in the first instance for the various private sector companies operating in Ireland’s liberalised market. The sector is regulated by the Commission for Communications Regulation (ComReg). The telecoms framework is based on principles of competition law, and where ComReg determines that one or more operators has significant market power (SMP) it imposes remedies to ensure that the dominant operator does not abuse its market position. ComReg is independent in its regulatory functions.
Under this EU regulatory framework and EU State Aids rules, Government can only intervene in the market where clear market failure has been identified. Policy is also “technology neutral” in that it does not favour one technology over another.
The private sector is beginning to deliver significantly higher speed broadband in a number of areas, with UPC providing up to 100mbps in some urban areas, and eircom carrying out fibre trials in urban areas. Ireland’s population density in rural areas poses significant financial challenges for the roll out of fibre or cable. New mobile technologies are however emerging and the proposed auction of radio spectrum by ComReg later this year, aims to make valuable spectrum available to industry for the purposes of rolling out next generation mobile broadband services which is likely to include high speed mobile broadband. Industry is keen to deliver, and to work with the Department on addressing challenges and opportunities, through the proposed Next Generation Broadband Task Force.
The question of state intervention in the market is complex. State Aids rules preclude the State from intervening where there is no market failure, and interventions cannot distort competition. The cost of rolling out a combined fibre (to the home and base station) and mobile solution (using the existing privately owned networks) is estimated by the industry to be in the region of €2.6 billion. Aside from State aids issues, affordability and a proven business case, a separate State intervention to build a distinct high speed mostly fibre based State owned network might discourage investment that would otherwise be undertaken by the private sector. The proposed Next Generation Broadband Task Force, which comprises key industry CEOs, aims to assess the opportunities for accelerated high speed broadband roll out and an early briefing with the Minister on this issue is advised.
The Department, with EU State Aids approval has introduced a variety of schemes and initiatives which are addressing market failure. These include the National Broadband Scheme (NBS), Metropolitan Area Networks (MANS), Schools Broadband and various interconnectivity initiatives. These are covered in more detail below.
Knowledge Society/Digital Economy
The Communications Division also plays an important role in the development of a knowledge based society and promotion of the digital economy. Apart from its key policy role and direct intervention via various schemes the Division liaises across Government with DETI, DES, IDA, EI etc. to further the knowledge society and digital economy. It is a challenge to optimise these links to best effect.
Key challenges and activities over the next six months are also detailed below and include:
· Transposition of the EU Regulatory Framework (May 2011)
· The establishment of a Next Generation Broadband Task Force
· Roll out of a Rural Broadband Scheme
· Ongoing implementation of the Digital Agenda for Europe (DAE)
· Preparation for the Presidency of the EU Council in January 2013
Katherine Licken
Assistant Secretary
March 2011
Communications Policy Division
Head of Division: Ken Spratt, Principal Officer
Functions of Division
Implementing policy initiatives and legislation aimed at driving investment in broadband, spectrum, next generation networks and telecommunications services for the benefit of consumers and the economy, and in compliance with EU targets and Directives. Oversight in relation to the corporate governance of the Commission for Communications Regulation (ComReg).
The telecommunications market is fully liberalised and privatised and the State can only intervene in cases of demonstrated market failure. A short overview of the market is contained in the introduction to this brief and a more detailed separate briefing on market developments, taking account of the Programme for Government, will be provided to the Minister to facilitate an in-depth discussion on market, policy and regulatory issues.
Transposition of EU Regulatory Framework
The EU telecommunications regulatory framework consists of 5 Directives, two of which were updated in 2009. Consolidated Regulations are currently being drafted to transpose the updated Directives by 25th May 2011.
The Digital Agenda for Europe (DAE)
The Digital Agenda for Europe (DAE) is one of seven flagship initiatives under the Europe 2020 strategy for smart, sustainable and inclusive growth. It has some 100 actions for both Member States and the EU Commission, covering areas such as Communications, Health, Environment and Innovation. DCENR is responsible for implementation of certain actions as well as the co-ordination of reporting on implementation of the DAE across Government.
Radio Spectrum
In July 2010, the then Minister decided that analogue television services would be switched off by December 2012. The impact of this decision is that valuable spectrum in the 800 MHz frequency band will then become available for telecommunications use. The Commission for Communications Regulation (ComReg) is currently consulting on the prospect of a single auction in Q4, 2011 for the release of spectrum in the 800, 900 and 1800 MHz frequency bands. Two companies however have telecommunications licences in the 900 MHz frequency which expire in May 2011. In order to allow the entire spectrum to be auctioned and released together, ComReg is proposing to issue 900 MHz interim licences (to January 2013) to these two companies comprising the same amount of spectrum as in their current licences.
Next Generation Broadband Task Force
In order to progress the delivery of next generation broadband, preparations have been made for the establishment of a Next Generation Broadband Taskforce (NGBT). It is envisaged that the NBGT would be chaired by the Minister and attended by 9 key industry CEOs. Preparatory meetings with industry have highlighted a number of potential work streams.
116000 Service
The European Commission requires Member States to reserve the number “116”, to be commonly available across Member States for socially important services. While a number of the 116 numbers are now operational, others remain unused including the number 116000, designated as a hotline for missing children. The Department has no policy remit to provide the service, but in line with Member States’ obligations the Department has brought the availability of this number to the attention of the relevant Government Departments and agencies.
MANs
The Department has invested some €176m in fibre optic rings (Metropolitan Area Networks – MANs) to around 93 towns throughout the State with a view to enhancing connectivity for business customers. The MANs are managed, operated and maintained on the Department’s behalf by a private company - e|net - under two concession agreements. To date 37 of the MANs are operational. The Department continues to work with e|net with a view to overcoming challenges to the operation of the remainder of the MANS. A Value for Money and Policy Review of the MANs programme has recommended a more targeted approach to MANs investment and options for a further MANs programme are being considered in this context.
Galway/Mayo Ducting Project
Bord Gáis Éireann has constructed 132kms of telecommunications ducting alongside its gas pipeline from Galway to Mayo (location of the Shell terminal) and a further 24kms spur to the outskirts of Castlebar and Westport.
Commission for Communications Regulation (ComReg)
ComReg was established in 2002 with an independent statutory remit for the regulation of the telecommunications sector. It operates under a three person Commission structure and its functions include the promotion of competition, consumer interests, the internal EU market, and efficient use of spectrum. It is also responsible for the regulation of the postal sector.
Communications Research Programme
The Department is jointly funding a three year “Programme of Research in Communications” (2010-2012) by the ESRI, at a cost of €75,000 per annum. The programme is designed to provide guidance to policy and regulatory authorities and aimed at encouraging investment in next generation broadband.
Exemplar Smart Communications Network
The establishment of the Exemplar Smart Communications Network programme is a key action in the Department’s 2009 document “Technology Actions to Support the Smart Economy”. The Exemplar is a test-bed site, where companies can trial the use of a new technology developed by Irish company InTune. The Department has invested €10m in establishing the test bed and established a Governance Board comprising officials of DCENR, IDA and Enterprise Ireland. A number of national and international companies, research institutions and State agencies have indicated their intention to commence research at the test-bed site and the Department is currently working with these partners to develop a research schedule.
The InTune technology, if commercially successful, will considerably enhance the capacity of fibre to bring high speed, high volume data to customers. Exemplar is the only such test-bed worldwide and could become a powerful magnet for the attraction of FDI as well as providing a test platform for indigenous companies and Irish researchers. Phase II of this project would involve the development of “live” test environment using existing fibre networks across Dublin and is being considered for progression in 2011.
Innovation Taskforce
The report of the Innovation Taskforce was published in March 2010 and an Innovation Taskforce Implementation Committee was established, chaired by the Minister for Enterprise, Trade and Innovation. The Department is represented on the Committee by the Secretary General and has a lead role in relation to one key recommendation relating to the roll-out of next generation network (NGN) services and six supporting recommendations.
Communications (Development) Division
Head of Division: Dave Hanley, Principal Officer
Functions of Division
To oversee the successful management and delivery of a number of critical projects aimed at ensuring national availability of broadband services, where the commercial market has failed to provide such services, and to assist in removal of barriers to commercial market development.
National Broadband Scheme (NBS)
The Department entered into a contract with Hutchison 3G Ireland for the delivery of the National Broadband Scheme in 2008. The State and EU has contributed some €79m to this project of which all but approximately €9m has now been expended. Broadband services are now available under the scheme to all premises within each of the 1,028 designated NBS areas. The NBS contract runs until 2014 and the Department remains responsible for the on-going management and governance of the contract for that duration.
Rural Broadband Scheme (RBS)
The Department will be submitting a proposal to the Minister for the establishment of an EU co-funded Rural Broadband Scheme (RBS), which aims to provide a basic broadband service to rural premises which cannot obtain a service from an existing internet service provider and which are outside the NBS area. The scheme will initially establish whether service can be provided by existing commercial operators. The Department will then engage in a tender process to identify a service provider. This process will be technology neutral. Applicants who qualify for inclusion in the RBS will receive a service in 2012, when the number of qualifying applicants has been determined and a service provider engaged. Applicants will be responsible for paying the ongoing costs of the service, once established.
State-owned Telecommunications Infrastructure
Government policy is aimed at leveraging State-owned telecommunications infrastructure to help deliver high-speed broadband and improved telecommunications services throughout the country. This policy strongly advocates open-access to State owned infrastructure. An elaborate network of State-owned assets already exists, which is generally open to service providers for broadband purposes. The Department has recently formally engaged with the relevant State agencies on this issue and it is anticipated that the NGB Task Force will focus on how State-owned infrastructure might be optimised to further facilitate the delivery of high-speed capacity.
Knowledge Society Division
Head of Division: Colm Butler, Principal Officer
Functions of Division
The Division is responsible for co-ordinating activities and policies in relation to the knowledge society, and for the corporate governance and oversight of the Digital Hub Development Agency (DHDA). It also oversees the activities, including financial support by the Department for the National Digital Research Centre, and implements eInclusion programmes.
Digital Hub Development Agency (DHDA)
The DHDA’s remit is to develop Ireland’s digital enterprise sector through the creation of a cluster of digital enterprises. It also aims to contribute to urban regeneration in the Dublin 8 area.
There are currently 85 digital companies/organisations operating from the DHDA site with approximately 860 employees in total. There are 15 staff members in the DHDA.
The consent of the Minister for Communications, Energy and Natural Resources has been sought for the sale of one of its sites. A recommendation for the Minister is in preparation.
A number of initiatives have been planned by the DHDA in 2011, with a view to providing new local and national opportunities for the digital economy. Discussions are ongoing with the Department of Finance in relation to formal sanction for these initiatives for which some provision has been included in the Department’s 2011 Estimate.
National Digital Research Centre (NDRC)
The NDRC was established in 2006 and is funded by the Department under a five year concession agreement with a consortium of third level institutions including DCU, TCD, UCD, IADT Dun Laoghaire and NCAD. The centre is based in the DHDA site and its purpose is to assist in translating university research into commercialised products in the digital media area. Its key focus areas are Healthcare, Environment, Education and Entertainment.
The NDRC currently has 18 core staff and approx 190 research and business personnel who are working on the commercialisation of research projects.
The five year concession agreement between NDRC and DCENR expires in October 2011 and a decision on the medium and longer term future of this initiative will be required over the coming months.
Knowledge Society
The Department’s “Technology Actions to Support the SMART Economy” outlines a number of areas in which the Department is seeking in conjunction with other key actors to promote and support the SMART economy. These include Exemplar (see above), Smart Cities, Smart Bay (in conjunction with GSI and Marine Institute), and Cloud Computing / Data Centres.
The Department also directly operates a “BenefIT” scheme which provides grants to community and voluntary organisations to deliver digital skills training to older people, people with disabilities and others who are unlikely to engage with digital technologies.
Kelvin Project
Project Kelvin is a €30m cross border project, funded under the EU INTERREG IV initiatives and provides direct international telecoms connectivity to the North West of Ireland by bringing a transatlantic telecoms cable ashore in Portrush. Under the contract, low/competitive prices for high speed international connectivity between the North West of Ireland and North America and Europe are guaranteed until 2018. The Kelvin connectivity is providing new business opportunities, in particular for data intensive enterprises and also improves the resilience of Ireland’s overall international connectivity network.
Communications, Business and Technology Division
Head of Division: Roger O’Connor, Director
Functions of Division
The Division, which comprises three technical staff, is responsible for policies and legislation relating to research and innovation, science and technology, green ICT, smart infrastructure, cloud, spectrum, internet governance, cybersecurity, emergency planning and emerging technologies. It provides critical technical expertise across the communications and emergency planning areas of the Department.
Emergency Planning
The Division supports the work of the Government Task Force on Emergency Planning and Emergency Planning for the Department. This is an important function given the continual importance of energy and telecommunications infrastructure.
Emergency Call Answering Service
The Department is responsible for the management of the Emergency Call Answering Service (ECAS), which handles 999/112 emergency calls from the public. The service is currently provided by BT Ireland under a concession agreement between the Minister and BT Ireland.
Fibre to the Home (FTTH)
DCENR has prepared technical Recommendations for Open Access Fibre Ducting and Interior Cabling for New Residential Buildings to make homes “Fibre Ready”. The recommendations have been issued for consultation with stakeholders across the public and private sectors with a view to establishing common standards for ducting and cabling in new homes.