Comreg Will Cost The Exchequer €300m in 2012 …..By Design

Comreg Will Cost The Exchequer €300m in 2012 …..By Design.

The flawed 4G spectrum auction process designed by Comreg will cost the taxpayer dearly. IrelandOffline now estimates that the auction will fall short of its optimal potential by as much as €300m when it is conducted this summer.

Countries that have large dispersed rural populations do NOT benefit from having a multiplicity of physical networks. Only urban areas benefit from multiple networks, in what is known as infrastructure competition, owing to the costs involved. Rural areas are simply being ignored.

Comreg have deliberately designed the forthcoming spectrum auction in Ireland so that each winner of spectrum at auction will have an obligation to cover only 70% of the population for the next 20 years. . 70% of the population of the state occupies ONLY 10% of the land area of the state leaving many rural consumers without any coverage.
Commenting on the process, Ireland Offline Chairperson Eamonn Wallace said:

“Comreg have proven yet again that when you fail to design you therefore design to fail.

The immediate victim will be the Irish Taxpayer and the ultimate victim will be the people living in 85% of the state whose coverage will be worse over the 20 year lifetime of these licences

The reason why the Swiss Taxpayer got €800m at auction for the same spectrum in March 2012 (for only 8m inhabitants) is because the networks can continue to share masts in rural areas as they have already done for 10 years. No new masts will be required to roll out the new services.“

The competition should have been designed to allow operators to fully share in rural areas, (RAN Sharing) where they never competed anyway and to compete in Urban areas. However the spectrum is sliced up into tiny blocks which are not usable for high speed mobile broadband and these separate blocks will be served from separate masts owned by separate operators. Large blocks of short range spectrum suitable only for Urban Areas will become available for auction next year as the MMDS TV services shutdown in April 2014 and free the spectrum up.

In rural areas the operators should have been required, not only to share their spectrum, but to share single masts as well. This would mean that only one physical network would exist in most of the state and one set of masts is all that is required but would also pool large blocks of spectrum on those masts capable of delivering high speed mobile services into the future. There is no competition in these areas currently.

Furthermore the money not spent on rolling out 4 separate physical networks in rural areas would largely accrue instead to the hard pressed taxpayer in the auction to be conducted in a few months time.

Certainty on rollout requirements would inevitably attract more bidders and with that higher prices at auction this summer. Uncertainty will result in the taxpayer losing as much as €300m euros in 2012 and IrelandOffline now believe that the 2012  auction will fail miserably and will result in at most €200m accruing to the taxpayer instead of the €500m that Comreg predicted they would get ( and to the IMF of all people).

Commenting further Wallace said,:

“Ireland will go down in history as the first country that deliberately designed a mobile spectrum licence so as  to abandon half the state. Instead of being an ‘Internet Capital’ most of Ireland will be a Connectivity Wasteland for many many years to come”

IrelandOffline calls on Comreg to look closely at the Census results released in recent weeks and to provide absolute clarity and certainty to all potential bidders on Infrastructure sharing, we all know the IMF ultimately wants them to do that but so does Rural and Small Town Ireland.

Furthermore Vodafone suggested a minimum 70% geographic coverage requirement ( equating to almost 90% population coverage) but Comreg, with both eyes on producing impressive sounding numbers for the IMF went for 10% instead.

In the UK one licence block is reserved specifically in order to IMPROVE rural coverage when they auction in late 2012. Any EU funding towards rural broadband will be directed to the owner of that block in order to improve coverage from 98% of the population upwards.

Ireland is facing a serious structural reputational risk across its entire regulatory sector as well as a material shortfall in exchequer funding and in delivering on target to the troika..

It is not too late to stop this madness and now would be the right time.

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