Not everyone is happy with State-funded fibre broadband
Published 07/07/2016 | 02:30
What if the National Broadband Plan is bad for your business? The future of broadband, we are told, means fibre connections to every rural home and business. It will encourage investment and startups.
But there is one category of business for whom the a state-subsidised fibre network spells hard times ahead: wireless operators.
For anyone who lives in a small town in rural Ireland, the marks of wireless operators are a common sight. These are the antennas on bungalows that connect to a local mast for basic broadband. They are a lifeline in a desert of crappy copper lines and impotent local exchanges.
According to the telecoms regulator, there are still at least 45,000 homes and businesses using fixed wireless broadband.
The Communications Minister, Denis Naughten, puts the figure even higher: "up to 100,000 customers". And these are served by up to 80 wireless operators all around the country. So while the rest of us are stamping our feet, demanding that the Government hurry up with its fibre broadband network, companies like Limerick-based Ripplecom, which employs 30 people and has 6,000 customers in 25 counties, are facing a serious challenge.
"I don't have a problem with competition," said Ripplecom's managing director, John McDonnell. "I do have a problem that Ripplecom, as a telecommunications operator, will not be able to access the fibre network on an open access basis."
McDonnell speaks for a large swathe of wireless operators. His main objection to the National Broadband Plan is that state funding shouldn't be used to knock out existing operators.
"Like Ripplecom, a lot of these questions have invested millions of euros in their network," he said. "And suddenly we find that the customer base which we have is to be taken away by Government-subvented commercial services. The Government is saying that there is market failure in the broadband market but, at the same time, are intervening in a commercial market and forcing telecoms operators out of that marketplace."
In some respects, this is a difficult argument to progress. While wireless operators can offer speeds of 30Mbs or more, they cannot scale up to the same degree as fibre providers. In other words, it's unlikely that we'll see a wireless service of 500Mbs or 1gigabit anytime in the next few years. And this is the Government's desired level.
Wireless operators have two responses to this. First, they say, the State is not giving them the chance to compete as it is withholding critical wireless spectrum that could vastly improve the speed and quality of wireless services.
"We can easily deliver speeds in excess of 30Mbs to customers off a wireless base station," said McDonnell. "But we can't get access to the spectrum. Instead, Comreg is going to auction it later. So on one hand the government is saying that there is market failure. On the other, it is saying that although licensed spectrum is a finite resource, they're going to run auctions in a failed market to see who pays the state the most for the right to use licensed spectrum. All the while, they're going to subvent the rollout of fibre across Ireland. There is some inconsistency in relation to that."
However, the other point wireless operators make is more controversial. People don't really need speeds of 200Mbs, they say. 15Mbs or 25Mbs would be just fine.
"Once you've downloaded all the boxsets, the actual average usage per customer in fibre homes is not really different to what we have," said McDonnell. "We have some fibre customers. And we've found that the average usage per customer is about 0.5 megabits over a period of time. Okay, you get bursts when you download a movie. But we'd expect that to go to 0.8 or 0.9 megabits."
This is a hard argument to sell. There are very few who think broadband applications will only incrementally increase over the next 10 to 20 years. Most estimates predict ten-fold increases at minimum, as live TV streaming gradually moves onto the internet at much higher resolution rates.
But whatever happens with the technology, McDonnell says investment is already seeping out of his industry.
"What is going to happen to almost 100,000 customers which the wireless community services at the moment?" he said. "Once we, as wireless operators, start to lose 10pc of their income, are we going to stay open for five, six, seven eight years to wait until the fibre rollout happens? Is it not better to involve this industry in a planned manner rather than putting all your eggs in one or two baskets?"