wdc20021216

Improve Telecom services and tackle pricing or West will lose out, warns WDC report

An enormous opportunity to bring investment and jobs to the Western Region will be lost unless action is taken to ensure modern telecommunication services are made available at a competitive price, a new report from the Western Development Commission has highlighted. The report "An Update on Telecommunications in the Western Region" makes recommendations to tackle the growing ‘digital divide’ which is threatening to leave the West seriously disadvantaged in terms of telecommunications infrastructure and services. Insufficient competition among telecommunications companies, poor services and high prices are among the problems uncovered. There have been significant delays in providing basic services and many parts of the Western Region do not have access to broadband.

In today’s information society modern telecommunications infrastructure is a basic necessity for business. Without quality broadband infrastructure, which allows for high speed transfer of voice and data, growth and competitiveness will be constrained. The Chief Executive of the WDC, Ms Lisa McAllister, said people in the West needed to be more aware of the importance of modern telecommunications services and the difficulties facing the West in a liberalised market.

"The case studies in the report show that good telecommunications is about retaining jobs as well as creating new ones. It is important that government policy is implemented as quickly as possible," Ms McAllister said. "Modern telecommunications can help rural areas overcome their relative remoteness but more work needs to be done in bringing broadband technologies to the West," she added.

One of the report’s authors, Dr Patricia O’Hara of the WDC, said the growth areas of the future were in knowledge-intensive industries and the telecommunications infrastructure needed for these sectors was relatively inexpensive compared to traditional infrastructure such as roads and rail.

"Telecommunications infrastructure represents one last chance for the West to catch up, but if certain actions are not taken there is a real risk we will experience the same lag as has happened with transport and energy infrastructure," Dr O’Hara said. Pricing is a key issue to emerge from the report. Companies in the West face higher costs for basic services. Case studies included in the report highlight the problems experienced by businesses. One company profiled is ANU Internet Technologies, now based in Galway city after being forced to move from Westport in Co Mayo because of higher costs. Managing Director Stephan Wik said the company was paying E33,000 per year for its telecommunications connection in Westport, but in Galway they can access a connection with twice the capacity for E23,000.

EsatBT DSL rollout. EsatBT is the first telecoms company to introduce DSL to the west of Ireland, offering a package suitable for small businesses/telecommuters for 90EUR + VAT/month. It is expected that a cheaper residental package will be introduced in 2003.

"We located in Mayo because we were told for four years that it would become less expensive, but in today’s climate you can’t continue to throw money away. I know other companies in Mayo are suffering badly," Mr Wik said. He is also concerned about the price of broadband in Ireland generally. A colleague in Germany pays just E16 a month for access to broadband using DSL technology. He would have to pay E90 a month for DSL. "The differentials are just too great. If I was considering setting up in Ireland today, I would think twice or three times about it," he said. The company has already moved all its development work to the US because of these costs.

The WDC report links both the quality of service and the prices charged to a lack of competition in the telecommunications sector in the West. In the Western Region there are two main providers, Eircom and Esat BT, but only a few towns have a choice of provider. A very common way of delivering broadband in Ireland is by leased lines, and the pricing structure means that generally the further companies are from Dublin, the more they have to pay, leaving companies in the West at a disadvantage. The report calls for the retail pricing structure for leased lines to be reviewed by the Commission for Communications Regulation (ComReg).

The report states that government policy should be based on an acceptance that telecommunications infrastructure in the Western Region must be on a par with other regions. Poor access to broadband in the West is due to "market failure". Low population densities means the return on investment is insufficient to attract private companies. The report says that additional targeted funding from government is needed.

The government has responded to shortfalls at local level with its Metropolitan Area Networks (MANs) programme to towns around the country. In running these networks it should be ensured that competition among providers is maximised and that services are available at a competitive price.

The report also calls for increased public investment in wireless and satellite technologies, which are particularly suitable for more remote regions. "An Update on Telecommunications in the Western Region" sets out the key issues and explains in detail the various technologies and services that are available in modern telecommunications, and their importance for business.

Other recommendations in the Western Development Commission report include:

• a government policy directive to ComReg to introduce flat-rate internet access as a priority is to be welcomed and it should be introduced as soon as possible;

• there is a current requirement on Eircom to meet the demand for fixed telephone lines under a Universal Service Obligation (USO). The government should consider extending this to include basic broadband

• at local level, organisations could form an effective collective voice in demanding services from companies and in seeking State intervention

• decentralisation of state bodies and deployment of the eGovernment strategy can play a major role in promoting ICT use

• at present there is an information deficit on the deficiencies and problems in the telecommunications sector. The Department of Marine, Communications and Natural Resources should be mandated and resourced to produce comprehensive information

The report can be downloaded from the WDC website at http://www.wdc.ie/db-files/Bulletin_44pgcover3.pdf (report in Adobe Acrobat format).

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