Comment: Few people, if any, can have missed the constant attention that has been given to the general subject of broadband in recent weeks.
The State's performance for availability, penetration rate (the number of connections per capita), price, and speed has been written about extensively, and with good reason - broadband is a critical input to future economic performance, yet the Republic continues to fall behind its European counterparts, putting us at a serious competitive disadvantage.
The Government has set an objective that the State should become a leading knowledge-based, open and competitive economy with emphasis on research and innovation. It is believed this will lead to productivity growth and will ensure that the economy will remain competitive. This view would seem to be supported by many, including the recent report produced by economist Paul Tansey for Microsoft Ireland.
However, despite the Government's best intentions, the recently published IMD World Competitiveness Yearbook shows the Republic having slipped two places from 10th to 12th in its ranking of the world's most competitive economies. The State is slipping behind for internet costs, broadband subscribers and infrastructure, including technology infrastructure (falling from 25th to 32nd place since 2004).
There are many periodic reports available that track the State's relative position for broadband. Whether it's the OECD, the European Competitive Telecommunications Association (ECTA) or other, they all show the same thing - the Republic remains stubbornly at the bottom of the table for broadband penetration.
That percentage growth has been high recently is of little comfort - it is easy to have high percentage growth when working from a low base. The Republic has this in common with other countries such as Greece and Slovakia at the bottom of the table. The latest ECTA report shows penetration in the State at 3 per cent, while the European average is 8.4 per cent.
Availability is also a significant concern. The Republic has not hit 90 per cent, whereas Northern Ireland hit 100 per cent some time ago. Scotland, Wales and other regions that compete with the State for investment are also approaching 100 per cent.
The Government target is to have 400,000 broadband subscribers by the end of 2006, and 500,000 by the end of 2007. The figure stands at approximately 150,000 according to this week's quarterly report from Comreg so, if we are to meet this target, the penetration rate will need to grow by 260 per cent in the next 18 months.
Strong growth over the past year has not been sufficient to hit the target and the growth rate has fallen recently as the free trial offers have ended. It now seems unlikely that the Republic will reach its target without a radical change in the market.
The recently introduced pay-as-you-go products are not likely to have a dramatic impact on take-up. A consumer who switches on their modem for little more than an hour each evening to check their e-mail and find some information will be charged more for using the pay-as-you-go product than they would using some existing flat-rate products.
This model eliminates one of the key features of broadband - that it is always on and the consumer doesn't need to be "watching the clock". Even use of the internet for making cheap phone calls (VoIP) needs flat-rate broadband access to be attractive. A radically different pricing model will be required if the pay-as-you-go model is to have any impact.
One sure way to bring new offers and new pricing for broadband is to have a competitive market but Eircom's competitors need access to the local loop so that they can deliver their own broadband (and voice) services to consumers using DSL. This is called local loop unbundling (LLU) and Eircom has been required to grant this access since 2001.
Yet, despite this, there are less than 3,000 copper lines unbundled. This is less than 0.5 per cent and is among the lowest in the EU.
Eircom has stated in a recent article that, rather than LLU, its competitors prefer to re-sell Eircom's broadband service. Other operators, including Alto members, hold a starkly contrasting view, maintaining that they have been forced to re-sell Eircom's broadband service because they have been obstructed by Eircom in their attempts to obtain proper LLU service.
Eircom has no incentive to make LLU a success as it would mean surrendering control over the copper line to one of its competitors, and it appears that it will frustrate the process at every opportunity. In December 2004, a number of broadband providers requested improvements to the LLU processes, which met with resistance from Eircom.
This led to two directives from the regulator, ComReg, and High Court proceedings by Eircom. Judgment in the case is awaited but, whatever the outcome, the court action has already had the effect of delaying any new processes by six months.
Neither does Eircom currently allow any broadband provider to supply line-sharing with single billing (wholesale line rental). Line sharing and single billing would allow new entrants to provide broadband, voice and line rental services to their customers on a single bill. This would make it easier and simpler for consumers wanting to move their business from Eircom.
Instead, Eircom only permits line sharing, where Eircom continues to bill the customer for line rental.
It's time for tough regulation for access to Eircom's network. With this in place, new competitors will invest and build out their own networks, bringing the choice and innovation that is needed for broadband to take off in the Republic.
Eircom's competitors need equivalence of access to the local loop. This can only be properly achieved if the access network is run as a separate operation, selling access to Eircom and its competitors on an equal basis.
ComReg must be given the powers to make this happen, if necessary by bringing forward primary legislation.
Tom Hickey is chairman of Alto, which represents alternative operators in the communications market.
