E-commerce is now big business. The European Commission estimates that the US Internet economy is worth $300 billion a year. If this was a country its annual gross domestic product would be just smaller than Switzerland's, larger than that of Argentina and several times that of Ireland. Irish people may be proud that Ireland's economy has grown on average over 9 per cent a year in the last four years, but this is dwarfed by the average annual growth of 175 per cent clocked up by the US Internet economy in the same period. Plainly there is a lot of business to be done online, but if Ireland is to fulfil its ambition to become a serious competitor in Internet business then accessing the Internet will have to become as mundane for Irish people as turning on the TV or walking to the shops.
Although more and more Irish people are going online the cost of making a local call to connect to an Internet Service Provider (ISP) remains high, even though that Internet service may actually be provided free of charge. In general, the Irish telecommunications market is highly competitive, as many new competitors have entered the market in the past few years. Even CIE has been empowered by the CIE (Additional Functions) Regulations 1998 to supply telecommunications services. The cost of international and national calls has fallen dramatically in recent years, but unfortunately this pattern has not been repeated in the "local loop". This is the "last mile" of wire that connects Irish homes and small businesses to the national telecommunications infrastructure and so to the Internet.
The job of regulating access to the local loop has been given to the Office of the Director of Telecommunications Regulation (ODTR) a body created by the Postal and Telecommunications (Amendment) Act 1996. At present the local loop is effectively controlled by Eircom. The ODTR has not directly attempted to force Eircom to divest itself of this monopoly. Instead the ODTR has tried to encourage competitors to build their own networks. Recently the ODTR awarded licences to enable the building of wireless networks which would compete with Eircom in the local loop. If enacted, the Broadcasting Bill 1999 will allow digital TV systems to provide Internet access as well as television programming (section 7.10).
Various other utilities such as cable TV and possibly electricity suppliers may also compete in this market. However, this progress is not fast enough for some and last April the Competition Authority launched a High Court action which alleges that Eircom has a dominant position in the local loop and that Eircom is abusing its dominant position contrary to section 5 of the Competition Act 1991. So far the main consequence of this action has been a row between the authority, the ODTR and the Minister for Public Enterprise. More recently, Eircom has instituted proceedings challenging an order of the ODTR requiring Eircom to lower the prices which Eircom charges its competitors for access to the Eircom infrastructure.
However, the judgment of the High Court in Orange - v- The Director of Telecommunications Regulation and Meteor may have more significance for the Irish Internet and hence for the Irish economy than either of the above two actions. In this case the High Court ruled that the ODTR had acted illegally when it decided to award the third mobile phone licence to a US company, Meteor. One advantage of mobile phones is that they bypass the local loop and its costs and controversies. New standards such as WAP (Wireless Application Protocol) allow mobile phone users to access the Internet. The new products and opportunities which will result are already a reality in countries such as Finland.
The amalgamation of e-commerce and mobile phones is particularly significant as mobile phones are one area of information technology where European companies have proven themselves highly competitive with companies from the US and elsewhere. The decision in Orange is currently being appealed to the Supreme Court and if it is upheld then the ODTR will have to go through its decision-making process again. This may mean that a third mobile phone licence will not be awarded for quite some time. What effect this will have on the Irish mobile phone market remains to be seen, but any restriction or restraint on access to the Internet or new technologies may have serious repercussions for Ireland in the future.
Denis Kelleher (www.ncirl.ie/itlaw) is a practising barrister and co-author of IT Law in the European Union, recently published by Sweet & Maxwell (London)