Public private route ideal for broadband expansion - analyst

Public private partnerships are the right way forward for expanding the State's broadband internet capacity, according to a well-known analyst on European telecommunications networks.

"Public private partnerships are a good idea in somewhere like Ireland, where lots of small towns are not geared up to have this [broadband access] there," said Mr Hamish Mackenzie, London-based senior telecommunications analyst for International Data Corporation (IDC).

The Government recently announced plans to invest €300 million to create fibre optic rings around 123 cities and towns by 2005, which would be connected to a national fibre network. All would be managed by a public private partnership, according to the Department of Public Enterprise, which put forward the initiative.

Dr Chris Horn, co-founder and chairman of Iona Technologies, also backed the Government plan for a series of publicly-owned fibre rings. Dr Horn is a member of an industry advisory committee that will work with the Department on the networks initiative.

"In a relatively small economy, there may not be the economies of scale to roll out broadband everywhere, so some coupling of public and private incentives may be necessary," he said. "The fact that the State is stepping in to regularise this is good."

But Mr Mackenzie said the State should shift its focus away from trying to force Eircom to give competitors direct access to its local telephone exchanges, a process known as "unbundling the local loop". Instead, the State should work to encourage significant reductions in the price that Eircom wants to charge competitors for "wholesale" access to such lines. Wholesale access means Eircom retains operational control of the lines running from the exchanges to local customers, but allows competitors to buy access and use it to offer their own retail services to consumers and businesses.

"Unbundling is really not the way forward. There are too many vested interests involved and the process is quite complex," he said.

Mr Mackenzie is completing a report on the western European domestic broadband market, in which he says the Republic ties with Greece for last place. "You have no DSL [digital subscriber line, a high speed broadband technology that uses ordinary phone lines], and almost no broadband cable," he said.

While the Scandinavian countries top the European tables, in western Europe Germany has the greatest broadband penetration, followed by France, Spain and Italy.

Some four million Europeans have broadband internet access, according to international consultants McKinsey. In the US, 10.5 million people have it.

Both the telecoms regulator, Ms Etain Doyle, and industry and lobby groups here have seen unbundling as key to deregulating the telecoms market. EU legislation also requires unbundling. But Mr Mackenzie said it had failed so far to open markets in either the US or Europe, and the focus on unbundling could further delay the growth of broadband.

"If you look at all the other countries, it's still the case that the incumbent [the former state-owned telecoms firms] has the vast majority of the market," he said. "The best way to [encourage broadband growth] is an efficient and fair wholesale provision. Certainly, it's the only way the market can improve in any meaningful timeframe."