Cumbersome litigation is damaging telecoms development

A series of legal challenges to licences awarded and a readiness to take court action over the telecommunications regulator's decisions on industry issues, are jeopardising the Republic's hopes of becoming an e-business leader, according to technology industry experts. They contend that the legal challenges are arising because the Government has an unclear policy on telecommunications and the role of the Regulator and has not passed the necessary laws to support telecoms infrastructure development.

One senior Irish industry source describes the current situation as "very serious" and believes delays in the rollout of new Internet access technologies like wireless broadband could deter ebusiness companies from locating here.

According to a number of industry experts, the Republic has reached a plateau in infrastructure development after several years of rapid growth.

Now, unresolved arguments and litigation threaten to stall essential infrastructure growth. Telecommunications operators are disputing such issues as interconnect charges - the amount they should pay each other when a call travels over another company's network - and the awarding of network licences.

The State established a strong profile in America and Europe following its initial, successful push to encourage competition, build high capacity fibre-optic networks and introduce new Internet access technologies, says Gartner Group/Dataquest senior analyst Mr Bhawani Shankar. In particular, the early granting of wireless broadband licences last year led many to believe the Republic was setting the pace for Europe, he says.

The State had also indicated its intention to allow carriers to compete for access to the telephone wires that run directly to homes and businesses, the so-called "local loop". Across Europe, former state-run telecommunications companies such as Eircom have controlled the local loop. "Unbundling the local loop", or opening these direct connections to competition, is listed as a priority by the European Union for liberalising the telecommunications market.

"At that point, many thought Ireland was very innovative and that Ireland would get ahead [of other European countries]," says Mr Shankar. "But litigation has put a stop to that."

The Republic is also now lagging behind other European countries in setting a schedule for unbundling the local loop. Mr Shankar says that in contrast, Britain has set a definite date of July 2001. BT, Britain's dominant carrier, which currently controls the local loop, has even asked that the date be brought forward to December of this year. "I don't see Eircom doing a similar thing in Ireland," he says, although he acknowledges that BT may well have "a bit of a hidden agenda there as well".

Decisions made by the telecommunications regulator, Ms Etain Doyle, are at the centre of current litigation as companies not awarded highly desirable telecommunications licences file appeals against her decisions. The cost of filing an appeal, £10,000 (#12,697), is considered to be low given the potential lucrative awards of a licence. Some industry figures suspect that appeals could also be filed simply to damage companies given licences, which stand to lose millions in sales revenue while court cases drag on.

Many blame the regulator for poorly-implemented decisions. But telecommunications companies themselves - many of which preferred only to comment privately - generally believe the regulator is doing the best job she can within her legal remit, and are calling for Government to legislate to give the role better-defined powers.

"Political responsibility is being shirked and a lot of blame is being shifted unfairly to the regulator," says Mr Feargal Marrinan, portal development manager at Ireland On-Line/Esat.

Critics say an infrastructure Bill and a Bill addressing the role and specific powers of the Regulator are badly needed. The Department of Public Enterprise introduced a wide-ranging infrastructure Bill last March, but the legislation stalled on its second reading in the Seanad. "Unfortunately, it hasn't gone anywhere since then because other priorities have overtaken it. Unfortunately it hasn't been high on the agenda," says a Public Enterprise spokesman.

It is understood that the Bill stalled because it contains proposals for compulsory purchase orders (CPOs) to acquire lands for infrastructure projects. These were seen (mistakenly, according to informed sources) to include CPOs for the placement of mobile-phone masts. Critics say politicians feared their constituencies would object to the bill on those grounds. It is understood that the Minister for Public Enterprise wishes to redraft and reintroduce the bill to calm such fears. But one technology industry source notes that mobile telephony is widely seen as the biggest driver in Europe for Internet use. Shelving the mobile phone mast issue also could stall Internet growth in Ireland, he says.

"The whole thing is being hijacked by the anti-mobile phone mast lobby," complains Mr Liam Duggan, managing director of NTL business solutions Ireland.

"Politicians out in the country make a fuss about the masts and then, because the TV cameras are there, start spouting off about the lack of IDA support for their region. They don't see the connection."

Last week, the Minister for Public Enterprise Ms O'Rourke indicated in a policy paper that she supported making the regulator's office a three-member commission and establishing greater penalties for violations of regulatory acts. While this development was welcomed by the regulator's office, the paper does not indicate when new legislation might be introduced. It also does not outline how the regulator's role might be changed or other ways in which it might be strengthened.

"We need to have a proper regulatory bill that lays down proper procedure and clearly defines the role of the regulator," says Mr Duggan, who notes that while he has disagreed with some of Ms Doyle's decision, he feels she has done "a good job".

Several sources said the regulator's office urgently needs an appeals commission which could fast-track decisions on frequent areas of dispute, such as the awarding of telecommunications licences. At present, such appeals are made to the courts. But the courts move slowly. Delays in decisions can permanently damage both individual companies, which often have made significant investments on the basis of having won licences, and the Irish telecommunications sector as a whole.

This in turn affects Irish businesses and the international perception of Ireland's e-business capabilities, says Gartner Group's Mr Shankar. He points to the delay in implementing the third mobile phone licence because of court challenges to the regulator's decision, and the current appeal against the distribution of broadband wireless licences.

Broadband wireless technology is seen as a swift solution to the lack of broadband connectivity options for Irish businesses. It is understood that Formus Communications, one of the companies awarded a broadband licence last year, was within four weeks of offering its service in Dublin. But a legal challenge to the Regulator's decision over the licence awards by an unsuccessful bidder means possible delays of one to two years.

"People running to the courts right away without [the regulator's] decisions being implemented stalls the whole sector," says a senior source. "We need something akin to the planning appeals board. Properly resourced, it would save companies money and save courts time."

"The Government has to be clear on what it wants in telecommunications policy," says Mr Marrinan. "And the regulator, in order to be effective, needs clear legislative powers."

klillington@irish-times.ie