Committee Reports > List of Committees > Joint > 2007 > Committee on Communications, Marine and Natural Resources > Report No. 09 - Review of progress on broadband rollout

Tithe an Oireachtais

An Comhchoiste um Chumarsáid, Muir agus Acmhainní Nádúrtha

An tAonú Tuarascáil Déag

Athbhreithniú ar an dul chun cinn maidir le leathanbhanda a leathnú amach

Aibreán 2007

Houses of the Oireachtas

Joint Committee on Communications, Marine and Natural Resources

Eleventh Report

Review of progress on broadband rollout

April 2007

Contents

Page no.

The Joint Committee wishes to advise that the transcripts of the public hearings on the 14^th June 2006 are available on the Oireachtas web site — www.oireachtas.ie

Chairman’s Preface

The Joint Committee on Communications, Marine and Natural Resources has a wide remit. However, the one area that particularly exercised the Joint Committee was the rollout of broadband. This was due, in no small part, to the fact that the Joint Committee considered that broadband must be regarded not alone as a key economic driver, but a new utility — turn on a tap, get water, flick a switch, get light and it should be the case that if you use a computer you have Broadband. As the Joint Committee will be wound-up with the imminent dissolution of the 29^th Dáil it is very timely that the Joint Committee reviews and publishes this, its final review of Broadband rollout.

It gives me, as Chairman, and the members of the Joint Committee no satisfaction to reflect on how over the lifetime of this Dáil Ireland has fallen from the top of the league to where the latest EU report highlighted a ‘two-speed’ Europe and noted that Sixty four million people now have broadband access across the 25 countries of the EU, but Ireland remains near the bottom of the pile in terms of penetration¹. This is unsustainable and the issue must be addressed.

Recognising the importance of broadband to the Irish Economy, the Joint Committee engaged in the largest single consultative process with stakeholders. This resulted in the Joint Committee’s Second Report and at the launch, in March 2004, it was clearly set out that what distinguished an Oireachtas report from other reports was that the recommendations made in an Oireachtas report could be reviewed by the Joint Committee to see what progress, if any, had been made in the implementation of the recommendations made by the Joint Committee. Following this review the Joint Committee published a second report on broadband with detailed questions the Joint Committee considered should be addressed. A full day was given over to following up these questions with the major stakeholders and this is the subject of this the third Joint Committee’s report on broadband.

As Chairman of the Joint Committee I am pleased to see that the Joint Committee has agreed to publish this, its final report on broadband.

I am conscious that this will be the final report published by the Joint Committee on Communications, Marine and Natural Resources as the 29^th Dáil will be dissolved within the coming weeks and a General Election called. At the inaugural meeting of the Joint Committee on 13 November 2002 I was nominated by Deputy Denis O’Donovan and seconded by Deputy Thomas McEllistrim and honoured to be elected Chairman of the Joint Committee. My time as Chairman has been memorable and fulfilling and the volume of work which the Joint Committee has done has been immense. The Joint Committee has produced major reports on Broadband (this being the third such report) Energy, Salmon, Broadcasting, Licencing of Local Radio and Non-ionising radiation from Mobile Phone Handsets and Masts.

The work of the Joint Committee came about from the 105 Joint Committee meetings, 30 Select Committee meetings and 24 ICT sub-Committee and Salmon sub-Committee meetings which were held during the 29^th Dáil. This reflects the commitment and dedication, which is often not seen or recognised, of those who have served on the Joint Committee throughout the term of the 29^th Dáil. I would like to extend my appreciation to the current members; Deputies Thomas Broughan, Bernard J. Durkan, Martin Ferris, Dr. Dermot Fitzpatrick, Peter Kelly, Tom McEllistrim, Denis O’Donovan, Fiona O’Malley, John Perry Vice Chairman, Eamon Ryan together with Senators Michael Finucane former Vice Chairman, Brendan Kenneally, Marc MacSharry and Kathleen O’Meara. I would also like to include in my appreciation those who were members of the Joint Committee and went on to serve the Oireachtas and the public in other ways, namely Deputies Simon Coveney, Paul Keogh and Martin Brady.

¹ Source — http://www.enn.ie/frountpage/news-0802328.html

I want also to make special mention and thank, both on my own behalf and that of the members, two staff who have served the Joint Committee in the most unstinting fashion and with the utmost professionalism; the Clerk, Mr. Ronan Lenihan and Ms. Siobhan Murtagh.

I would also like to record thanks to the staff of the Houses of the Oireachtas, the staff in the Office of the Editor of Debates, the staff in the Broadcasting Unit, the sound engineers, the Director of Committees, Mr. Art O’Leary, the Deputy Director, Mr. Padraic Donlon, and all the staff of the Committee Secretariat in particular, Mr. David Alwright, Mr. Paul Campbell, Ms. Katie Harrington and Ms. Jenny Duane for their hard work and assistance to the Members and the Joint Committee.

Noel O’Flynn T.D.

Chairman of the Joint Committee on Communications, Marine and Natural Resources.

18 April, 2007

Acknowledgements

The Joint Committee wishes to thank Ms. Sadhbh McCarthy and Mr. Simon Nugent for the work undertaken, when as the consultants engaged to assist the ICT sub-Committee, they produced the comprehensive report that formed the major part of the Joint Committee’s 2^nd Report on Broadband. Ms. McCarthy also assisted the Joint Committee in this the 3^rd and final Joint Committee’s Report on Broadband.

The Joint Committee would also like to than thank the following stakeholders for participating in the Joint Committee meeting of the 14^th June 2006.

•eNet — Mr. Conal Henry, Mr. Eoin O’Driscoll

•Smart Telecom — Mr. Oisín Fanning and Mr. Irla Flynn

•BT Ireland — Mr. Danny McLoughlin and Mr. Peter Evans

•Eircom — Dr. Phill Nolan and Mr. David McRedmond

•ComReg — Ms .Isolde Goggin, Mr. John Doherty and Mr. Mike Byrne

•Minister Noel Dempsey T.D., Minister for Communications, Marine and Natural Resources.

Considerations of the Joint Committee

In March of 2004, the Joint Committee on Communications, Marine & Natural Resources, published its Second Report “Provision of a national high speed broadband infrastructure [including the costs to users and the potential to deliver Government, Business and Commerce functions through the national high speed broadband infrastructure].”

The preparation of that report was the result of an extensive consultation process which facilitated members’ interaction with a wide variety of experts. This resulted in both oral and written evidence being submitted from a wide range of parties interested in the area of broadband and the delivery of Government, business and commerce functions via broadband.

The report served a number of purposes. For the first time it brought together, on the issue of a national high-speed broadband network, the detailed submissions and recommendations of a wide range of experts, interested parties, industry representatives and Government Departments. This furthered both the understanding and the level of debate on this key competitiveness issue. In addition, the report recommended a way forward in developing a national high-speed broadband network. Finally, the report highlighted the critical importance that broadband was likely to have in ensuring balanced regional development, in providing communications resources for socially disadvantaged groups in our society and in limiting the effect of geographic isolation.

The recommendations that the Joint Committee made were loosely grouped under three over-arching themes that emerged, namely, ‘Planning to succeed’, ‘Market Failure’ and ‘Broadband Usage’. The report summarised, under seven chapters, what the Joint Committee considered were the key comments and observations of the debate. The Joint Committee reproduce (at Appendix C) a summary of the recommendations made.

At the launch of the Joint Committee 1^st Broadband Report it was advised that the Joint Committee would, at a future date, revisit the report to ascertain what progress, if any, had been made on the recommendations made in the Report.

This review commenced in 2005 when the Joint Committee agreed to engage consultants to assist the members of the ICT sub-Committee to review the progress made on the implementation of the recommendations made in the 1^st Report on Broadband published by the Joint Committee in March 2004. The consultants were requested to review the technological advances made in developing alternative platforms for the delivery of Broadband and the progress, if any, in the implementation of the recommendations made in the Second Report of the Joint Committee.

The report of the consultants was published, in full, as an Appendix to the Joint Committee’s 2^nd Report on Broadband which was published in March 2006. The 2^nd Report resulted in the Joint Committee formalising 35 questions to be addressed by the major stakeholders. The Joint Committee reproduce (at Appendix D) a summary of the recommendations made.

The Joint Committee observed that three main issues impacted on ubiquitous, low cost accessible broadband. The Joint Committee considers that these three issues are:-

1.Government Policy in regard to broadband rollout

2.The incumbent fixed line operator

3.The lack of dynamic, forceful and effective regulation.

1. Government Policy in regard to broadband rollout

The Joint Committee notes that there are two main Government policy responses to broadband roll out; 1) the MAN’s project and 2) the Group Broadband Scheme, latterly being replaced as the Nationwide Broadband Scheme.

The MAN’s project

The Joint Committee notes and respects that the Minister considers the MANs a public policy imperative that delivers an alternative telecommunications infrastructure to challenge the fixed line incumbent to open up its network. The MANs project is a public infrastructure investment that will have long term, rather than short term benefits.

The Joint Committee, in its 1^st broadband report, noted that

“One of the main ways in which market failure can be remedied is by providing alternative providers with wholesale access to networks. In essence this is what the Government is doing through its MAN initiative.”

In recommendation 3.2 of the same report the Joint Committee (paragraph 8) said

“The critical question for Government would appear to be whether existing investments and future investments in building the MANs networks are in fact going to provide value for taxpayers money and if in doing so they are likely to destroy the business models for companies which have already built such rings. If the MANs and other investments funded by Government give rise to the perverse effect of increasing the amount of duplicated/unlit fibre that sits in the ground in Ireland then they will be viewed as a policy failure.”

Further, that same report recommendation 4.1 set out (paragraph 5) noted that

“… … As the Joint Committee has previously noted, the Government needs to consider very carefully whether the current expenditure on the MANs is the very best use of limited funds. In some ways it would seem to be more logical to narrowly focus these funds on ensuring that broadband is made available to those disadvantaged communities which will not otherwise get broadband — even when the MANs are completed. These may be geographically isolated communities, communities which cannot afford the broadband that is available or groups who would not even know how to go looking for broadband.”

The Joint Committee concludes that the MANs project, in terms of addressing market failure, has not succeeded in delivering what the Irish public has demanded - ubiquitous, low cost broadband, but it will address market failure in terms of next generation network infrastructure. The MANs project is a policy response to the need for long term public infrastructure investment. However, on its own as a policy response it will be insufficient to meet the immediate demand for universal, low cost accessible broadband.

The demand for broadband has, in the opinion of the Joint Committee, always been there, the public’s willingness to sign up for the service has been driven by ubiquitous, low cost availability. This public demand is more than evident in the phenomenal growth of broadband take-up that has occurred in the last 12 months.

Group Broadband Scheme/Nationwide Broadband Scheme

The Joint Committee notes and respects that the Minister considers the Group Broadband Scheme/Nationwide Broadband Scheme to be public policy that will deliver broadband connectivity to communities. However, as with the MANs, the Joint Committee considers that while a good policy, it is a short term failure in that it cannot deliver if the short term objective is universal, low cost accessible broadband.

The Group Broadband Scheme/Nationwide Broadband Scheme is taking too long to deliver broadband connectivity to communities who, anyway, (in most cases) have had to rely on the incumbent fixed line operator for backhaul. Problems can and are being compounded where the incumbent fixed line operator cannot provide backhaul and alternatives, such as satellite has to be deployed.

General considerations

The Joint Committee considers that in terms of Government policy on broadband rollout the crux of the problem is that two pillars of public policy response, the MANs project and the Group Broadband Scheme/Nationwide Broadband Scheme have not been focused on what should be the crucial issue, the short term delivery of universal, low cost accessible broadband.

By the completion of Phase 2 of the MANs project 117 towns with a population over 1,500 will be completed. Eircom have approximately 700 exchanges left to make broadband enabled. The Joint Committee considers that the universal, low cost accessible broadband is almost within grasp.

The Joint Committee, in an ongoing effort to address immediate demand for broadband makes two recommendations;

a.The Joint Committee reiterates recommendation 2.4 in the 1^st Report on Broadband - “Encourage closer co-operation between the Government, the telecoms industry and the end-users of broadband services.”

The Joint Committee considers that short term polices are all that are required to get Ireland back to the top of the ICT league and with so much work done in enabling exchanges and under the MANs and Group Broadband Scheme/Nationwide Broadband Scheme all that is needed is co-operation between the stakeholders on an agreed plan.

b.To deliver universal, low cost accessible broadband to the remaining parts of Ireland that do not have broadband the Joint Committee recommends, as an outcome of an agreed plan between stakeholders coming from the “… … closer co-operation between the Government, the telecoms industry and the end-users of broadband services”, that there should be a publicly funded programme, that is run as an open tender to provide nationwide broadband access; this can be by way of any platform including fixed line, mobile wireless, whatever method or combination of methods is available.

2. The incumbent fixed line operator

The Joint Committee notes that the ownership and management of Eircom has changed and with this change the Joint Committee has detected a change in attitude in regard to broadband rollout. The Joint Committee considers that it is, as yet, to early to pass judgment as to the sustainability of this change.

The Joint Committee notes that Eircom is a commercial shareholder owned company and is not a Government or Semi-State company. Therefore, there is very little that the Joint Committee can bring to bear as this is the main function of ComReg. Notwithstanding this The Joint Committee will await the outcome of the plans which Eircom has such as the recent announcement in regard to inter-operator migrations as part of LLU. The Joint Committee look forward to a more productive public private engagement in this area.

Further, the Joint Committee notes that Eircom have approximately some 700 exchanges left to make broadband enabled. The difficulty to enable these exchanges is that Eircom cannot make the business case.

3. The lack of dynamic, forceful and effective regulation

The Joint Committee notes the concerns that have been raised in regard to ComReg and its performance in relation to the roll-out of Broadband. The Joint Committee considers that the legislation establishing ComReg may have been deficient and have left ComReg as a regulator without ‘bite’. The Joint Committee agrees with ComReg’s request for increased powers to allow them ensure the properly managed regulatory environment which will best facilitate and enable ubiquitous broadband supply.

The Joint Committee welcome the provisions of the Communications Regulation (Amendment) Act 2007. These will strengthen the power of ComReg and the Joint Committee look forward to seeking this legislation bear fruit and that the public will see a more engaged ComReg tackle and deal effectively with how it regulates the telecommunications market, including broadband.

Conclusion

The Joint Committee has identified, what it considers are the three main issues that need to be addressed. The Joint Committee notes the change in the management and ownership of Eircom and the change in attitude to broadband provision, it remains to be seen if this will continue, particularly in regard to the business case for the remaining exchanges that have, as yet, to be broadband enabled. The Joint Committee notes ComReg have now been given expanded powers, the challenge, for ComReg, is to ensure that it delivers better and more effective regulation and no doubt any new Joint Committee of the 30^th Dáil will invigilate ComReg in a strong and robust manner. The Joint Committee considers that the MANs project and the Group Broadband Scheme/Nationwide Broadband Scheme are good policies, but in terms of the short term policy imperative, delivering universal low cost accessible broadband, they are not the appropriate policies to address market failure.

The Joint Committee makes two recommendations.

1.Act on recommendation 2.4 in the 1^st Joint Committee Report on Broadband and “encourage closer co-operation between the Government, the telecoms industry and the end-users of broadband services.” The Joint Committee recommends the establishment of a stakeholders group to agree a short term plan that addresses market failure.

2.Following on recommendation 1 above, set in place a publicly funded programme, that is run as an open tender to provide nationwide broadband access; this can be by way of any platform including fixed line, mobile wireless, whatever method or combination of methods is available.