Telecoms: the state of the market
ComReg Chair Kevin O’Brien discusses the key issues facing the market and the positive trends in choice, quality and spectrum testing.
From ComReg’s perspective, the telecoms market and consumer experience can best be viewed through the lenses of choice, quality and price.
Kevin O’Brien relates: “In general, choice is getting better and better with more market entry over the last number of years and operators providing more variety and range.” However, he also recognises that at European and Irish levels, the market has now entered a phase of consolidation – the most significant change last year being the acquisition of O2 by 3: “ComReg does have some concerns about where consolidation will lead us – and we’ll keep an eye on it – but in the main, the market has been offering more and more choice to the consumer.”
More bundles of telephony, broadband and TV are becoming available along with a greater range i.e. broadband products at differing speeds, broadband products without telephony, 3G and 4G.
The last two years have seen a huge step change for 70 per cent of the country. We now have the UPC high speed platform (800,000 households) and eircom Next Generation Access passing the 1 million-household market with a target of 1.6 million.
Operators such as Vodafone and Sky are also offering products through the eircom networks and the announcement of the joint venture between Vodafone and ESB is also an interesting development, with a stated ambition of bringing fibre to 500,000 homes initially.
The 4G service with associated high speeds is being rolled out by the operators on foot of the successful spectrum option, introduced in 2012.
“As is well-documented and publicised, there are places where the market does not yet deliver,” he explains. “With a much more rural demographic than most European countries, Ireland faces distinct challenges. While at least in theory everyone has access to some broadband, the quality of that is not sufficient in parts of the country.”
ComReg supports the ambition of the National Broadband Plan which aims to meet the EU target of every household having 30MBps by the end of 2020: “We are participating in a steering committee with the department and we think that state intervention is correct where the market will not deliver. Our main focus, though, is on where the market is active. Against the backdrop of a tough recession the progress we have seen is a big achievement.”
More choice in the mobile sector is starting to come from mobile virtual network operators (MVNOs). Tesco is the largest operator at present but UPC and Carphone Warehouse also plan to enter the market.
“We see some additional choice for consumers in the mobile space coming that way,” he continues. “Sky have launched into the broadband market and they have now launched into the high speed fibre market which is positive as well.”
Over the last two years, ComReg has also seen a general decrease quarter-on-quarter reduction in revenue per user (RPU) to around €27 per month.”
That captures a degree of deflation in telecoms pricing “but that can’t go on forever” as networks require investment. “What we do see is a hardening up of some of those prices,” O’Brien notes, pointing to recent price increases on headline products by eircom, Vodafone and UPC.
ComReg is primarily a competition regulator which a responsibility to oversee price changes. Continuous price increases over time would lead to the regulator asking whether there was a fundemental competition problem “buy we’re not at that point for 70 per cent of the country.”
Consumers
The consumer side of regulation can be sub-divided between consumer rights and consumer choice. ComReg makes a wide range of information available for consumers through www.callcosts.ie – people can input their own telecoms profile and can choose the best value package that meets their needs.
“We see switching continuing in the marketplace all the time and we want to empower the consumer in relation to that,” O’Brien says. “We have taken compliance cases in this regard and a significant case with eircom was settled in the last 12 months. Any block that operators will put in place is something that we’ll examine very closely and we’ll take compliance action if we need to.”
Under our regulations, consumers have certain rights to exit contracts and how they receive information about their account. ComReg receives and acts upon approximately 30,000 contacts per year from consumers.
“Quarter-on-quarter, the number of texts people are sending is declining rapidly,” he remarks. “People are moving to ‘over the top’ services like Whatsapp and that type of data service is replacing the use of SMS.”
As a result, the business model for operators is rapidly changing. Approximately 60 per cent of mobile subscriptions are now for smartphones and the demand for data is constantly growing. The demand for voice and SMS is declining “and how the operators price their products is changing.”
Future
Asked about ComReg’s key priorities for 2015, O’Brien highlights its consultation on universal service – the traditional safety net for consumers: “We do see that changing over time but we are obliged to ensure that that universal service is in place.” eircom has traditionally operated in this role and ComReg will have a continued focus on ensuring an appropriate level of universal service.
The regulator will also seek improve the quality of consumer engagement by operators, some of which have neglected this “to some extent.” Complaints against well-known companies occasionally spike and rogue operators are also present: “If there is any behaviour which we think is causing significant detriment to consumers, we will chase it down.”
ComReg has also been consulting on which spectrum bands will be suitable for the next auction. The 3.6 band, for example, is traditionally used by fixed wireless access operators and is a particular area of focus.
On the wholesale sale, ComReg has been working closely with eircom and other operators to ensure that the 200,000 direct-fed homes (i.e. with a direct wire to the exchange) are brought into the high speed broadband category.
“Positive work by ComReg can open up the possibility of high speed broadband pretty quickly for those people,” O’Brien comments. The regulator will continue its focus on the quality of the wholesale products provided by eircom to other operators and continue to support the Department of Communications, Energy and Natural Resources in its ambition to roll out high speed fibre.
As a test-and-trial location, Ireland has certain advantages compared to other European countries i.e. a less congested spectrum, much less defence usage, and a smaller population density: “We’re a good place for people to come and test things out. The test-and-trial scheme is a very easy way to come and do that and it fits in well with the foreign direct investment and R&D agendas which Ireland pursues.”
Commission for Communications Regulation
Block DEF
Abbey Court Irish Life Centre
Lower Abbey Street
Dublin 1
Tel: 01 804 9600
Web: www.comreg.ie
