The myth of the competitive market

IrelandOffline, a leading consumer advocacy group, have received a letter from a member outlining the reason that broadband is not available in certain areas of the country and the excuses for this failure as outlined by the Minister of Communications.

Minister Ryan responds to every query with : “The provision of broadband services is, in the first instance, a matter for the private sector service providers operating in Ireland’s fully liberalised telecommunications market. Broadband services are provided by private service providers over various platforms including DSL (i.e. over telephone lines), fixed wireless, mobile, cable, fibre and satellite.”

IrelandOffline would like to point out a few home truths to the Minister:
The market is not “fully liberalised” as only one provider exists in the vast majority of the country and that provider is eircom. They provide the lines, control the contention ratios and the price of access.
They provide the lines (bitstream) to a number of resellers of the service and constrain the prices to that of the highest in the known world(1). If there was truly competition in the market place these prices would fall to somewhere near the European average.
While in some urban areas there is some competition between cable and DSL this is far from widespread and only exists in certain small “data islands”.
Fixed wireless access is available is certain geographic areas and usually the service is quite good, however the licensing terms are usually just gigantic circles meaning that a lot of areas that desperately need broadband cannot be covered by this system.
The number of fibre connections to either the local cabinets or to homes is extremely limited.

Attempting to use mobile or satellite forms of access to the Internet is disingenuous in the extreme as no other reputable measurement agency includes those types of access in their figures. By 2020 the EU wants 100% of homes to have broadband speeds of at least 30Mbps.
We have questioned, on numerous occasions, the ability of mobile networks to deliver a fast consistent experience to the subscribers of this service(2) due to various technical limitations of the service.

Furthermore Minister Ryan likes to say:
“We are among the top European countries for broadband leadership, ahead of France, Germany, Spain and the UK and we must build on this. Service providers here are already beginning to deliver the 100 megabit connections in 2010 that Europe is seeking for 2020. On access, we are two years ahead of the EU’s target for nationwide availability, with the National Broadband Scheme nearing completion.”

The National Broadband Scheme in reality has provided no additional Broadband at as it was a subsidy toward roll-out of a Mobile Phone network. Under its licence conditions, the provider was obliged to add more Mobile coverage anyway. So the NBS was just subsidising one Mobile operator against the other three, and not substantially adding to Broadband Infrastructure at all. This is hardly a fair or economically beneficially situation.

We call on the Minister to recognise that the policy of hiding behind the myth of the “the fully liberalised” market has been a total failure and the issue needs to be addressed urgently if we are to meet the EU targets as set out.


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