Delay in key Bill is bad news for the economy

What can the Government be thinking of, leaving the extremely important Communications Bill to languish just when this country most needs its provisions to be hurried into law?

The Bill has already been worryingly delayed, as some politicians fretted that a few elements, such as those dealing with the placement of mobile phone masts, could be politically toxic. So the Bill had to go through a redrafting process to make it more acceptable to those jittery souls.

The new drafting of the Bill was supposed to come before the Dβil this year (after we were originally told it would likely be law by the start of 2001).

Now, it is off the formal Dβil agenda for this year. It appears it won't be considered until next year, at which point it is quite likely to be swamped by the general election.

Yet the central provisions of this Bill are critical to one of the most vexing economic issues we have - the Irish telecommunications market is sunk in a permafrost of inactivity. It looks less and less likely each day that anyone will see the emergence of a healthy - nay, even a remotely reasonable - broadband market for businesses in the next few years. Home computer users and small businesses may not see an affordable market emerge within this decade.

The problems have been rehearsed many times in many places: some of the upstart telecommunications companies that would have helped drive prices lower have folded in the past year.

Eircom has moved reluctantly and conservatively in this area and, as it becomes a private company under Valentia, seems unlikely to push forward with what it decries as loss-making broadband provision. A legal action by Eircom against the Office of the Director of Telecommunications Regulation (ODTR) has stalled home broadband provision and means competitor companies will be unlikely to offer it until the situation is resolved. The economy has buckled in many areas, with telecoms particularly hard hit.

Some of the fibre optic cable that, by Government stipulation, should have been available from Esat to be independently managed by competitor companies - so-called "dark fibre" - was lost after the BT buy-out (Esat now manages it).

And despite all the whining by Eircom's competitors, including some massive companies with global networks, they haven't seemed capable of offering any of their fibre to businesses at a significantly lower cost than Eircom. Therefore, the Republic remains one of, if not the most costly place in the world for domestic broadband connections.

The Communications Bill contains provisions that could have helped to unsnarl this situation by redefining the role of the ODTR. The Bill would see this office turn into a far more powerful three-person committee with real ability to compel telecommunications companies to comply with its rulings. This commission could also force companies (namely, Eircom) to comply with EU legislation regarding unbundling the local loop (giving competitors access to the copper phone lines that run directly into homes and offices).

The Commission's rulings would stand during any process of appeal - none of these endless delays while lawsuits are filed.

At the moment, the telecoms director, Ms Etain Doyle, is greatly restricted in her ability to enforce rulings her office makes. Also, she is unable to act at all in some areas that would benefit from having an outside arbiter.

This makes the office relatively toothless, in comparison to other regulators across the EU, or the equivalent agency in the US, the Federal Communications Commission (FCC). A strong regulator could have resolved some of the problems above before they reached the present impasse.

To defer until well into next year (if at all) the implementation of the Communications Bill almost certainly will have dire effects on the economy because our telecommunications market will not advance.

The Irish climate for business, especially for multinationals, will start to appear sub-standard. The sector most affected will, of course, be the technology industry, which desperately needs good broadband connections. Also badly hit will be our universities, colleges and research institutions, which need such connections to be a competitive part of a global research community.

On a slightly different tangent, one could argue that home users might as well give up on their dreams of cheap broadband connections because a viable, profitable market for home broadband has not yet emerged, and will not now emerge until years in the future. That, at least, is the contention of author and columnist Robert X Cringely, he of Triumph of the Nerds fame.

Recently the home broadband pressure group Ireland Offline made much of one of his columns in which he explained how to create a cheap home broadband connection - if you could get a particular type of line from a reluctant phone company. Eircom, of course, won't supply that kind of line any more.

I wonder if the group will also accept his argument, over two columns, that home broadband is too expensive for telecoms companies to provide to home or small business users. Home broadband costs around $45 (€50) monthly in the US because it is heavily subsidised by suppliers. Like it or not, Eircom's much higher costs - £99 (€126) monthly - are closer to the real cost of home broadband provision.

In the current battered telecoms market, Mr Cringely says home broadband is not viable. All the major DSL providers, such as Covad, Northpoint and Rhythms, are imploding. The biggest cable ISP, Excite@Home, is gone. No company in the US is making money providing home broadband and no company providing broadband content is making money either (outside of a few pornographers, not enough to support an entire market). It will be years before demand increases and makes home broadband profitable. So companies will stop providing it, he says.

He quotes a Lucent vice-president he recently spoke to: "There are approximately 400 million people on earth who now have internet access, but fewer than 10 million of those have broadband," he said. "That is less than a 3 per cent market penetration and it means that IF broadband is going to be a commercial success - and that's a very iffy IF - it will be years in the future."

Thus, I would argue that perhaps home broadband shouldn't be a commercial issue. Maybe it should be a Government issue - and there are some national governments that already think so. I'll come back to that topic very soon.

klillington@irish-times.ie