Rural divide hampers broadband progress

19-03-2008

by Ciara O'Brien

Ireland had the fourth-highest broadband penetration growth in the EU during 2007, but lack of rural coverage means we are still behind the EU average.

Broadband take-up grew 5 percentage points last year, up to 17 percent, but with the EU average at 20 percent, it is clear that Ireland is still under-performing, according to the European Commission's 13th Progress Report on the Single Telecoms Market.

The report says competition in the Irish broadband market increased during 2007, with mobile and wireless broadband attracting new customers, along with increasingly attractive fixed-line packages. Recent data from ComReg shows that mobile broadband now accounts for 14 percent of all broadband subscriptions in Ireland. Local loop unbundling also progressed well during the year, opening up new opportunities for alternative operators, the EU report said.

However, the document also highlighted poor broadband availability in rural regions as an area ripe for improvement, where DSL covers just over two-thirds of the population. This compares to 86 percent access nationally.

The telecoms report indicated that the Irish love affair with mobile phones is showing no sign of waning, with mobile penetration at 117 percent in October last year. This compares to 112 percent penetration throughout the EU. Services have also expanded, with four 3G operators in the Irish market and strong take-up of 3G services. Mobile TV also made a foray into the market, with one operator testing mobile TV services based on the DVB-H standard.

The recent reforms in the market also came in for some praise, such as ComReg's enhanced enforcement powers, which enable it to dole out greater penalties for breaches of obligations and give it the ability to investigate breaches of competition law.

EU average

However, in comparison to the rest of the EU, the picture is not so bright. In 13th place, Ireland is still far behind the leaders in broadband deployment, with Denmark, Finland, the Netherlands and Sweden heading up the world league tables with penetration rates of more than 30 percent. The UK, Belgium, Luxembourg and France all had penetration rates higher than the US, which had a 22.1 percent rate in July 2007.

There are still areas for improvement across the EU, with incumbent operators still having a strong hold on the EUR300 million telecoms market. According to the report, the incumbents hold close to half of the broadband lines in the EU, control over 60 percent of broadband connections in seven Member States, and have more than 70 percent market share in Cyprus, Luxembourg and Finland.

"The European regulatory model is designed to increase competition in the telecoms market and this certainly is starting to pay off," said Viviane Reding, the EU's telecoms commissioner. "However, the job is not yet done. Competition is limited for access to the fixed network, which is still provided to 86.5 percent of customers over the incumbents' infrastructure. In addition, though telecoms technologies know no borders, only 30 percent of major operators' EU business is outside their home market. This shows that we still lack an attractive single market for businesses and services of European dimensions, so we must intensify our efforts to reduce the regulatory borders in Europe. Only by opening up the single market for business will Europe become competitive and will consumers benefit from a wide choice of rich and affordable services."

There have been some changes in the fixed-line sector in the EU, with revenues slipping by 5 percent year-on-year, while prices remained static. According to Reding, customers are slowly switching to mobile and IP services. There is little cause for panic among the operators, however, who saw strong growth in broadband services, generating revenues of EUR62 billion.

One area where Ireland is outperforming rivals is in number portability: according to the EU report it takes only one day in both Ireland and Malta to change mobile operator, but up to 20 days in Italy and Slovakia.