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Private sector should drive the bulk of next-gen network investment, says new BT chief

BT Ireland CEO Graham Sutherland believes competition in telecoms will help restore the economy

John Kennedy

Published 19/08/2010 | 09:59

IF there is one lament that the new CEO of BT Ireland North and South Graham Sutherland has for the telecoms industry in the Republic it is that circumstances over the last decade have prevented telecoms from being considered a competitive tool in Ireland’s economic make-up.

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This is not for want of investment – up until two years ago the sector was investing €700m a year in infrastructure – but more for lack of progress in terms of competition and the spread of broadband on an equal basis.

Telecoms, believes Sutherland, will be key to the economy in the future.

“Competition is driving significant investment in networks at the moment, which is a great thing, and we’ve seen tremendous steps forward in broadband take-up and the speed of broadband, but there is an element of a two-speed economy between the cities and rural areas. We have a divide that needs to be eradicated.

“A vision around how we will achieve that and go about that is required in my opinion.”

Scotland native Sutherland took on the role of CEO of BT Ireland this summer, taking over from Chris Clark who is now managing director of BT Enterprises.

Prior to this, Sutherland had been chief financial officer at BT Ireland since 2006.

Sutherland will be a panel member at the upcoming TIF Annual Conference at Dublin Castle on 12 October next.

According to the most recent financial results, BT Ireland’s profits were up 12pc year-on-year and operating costs were reduced by 8pc in the last 12 months.

Over the past year, BT Ireland has rolled out its next-generation broadband service, BT Etherflow, which is being used by mobile telcos, including 3 Ireland, as part of its role in the National Broadband Scheme.

BT Ireland also signed a seven-year contract with Vodafone Ireland for the provision of wholesale fixed-line network services, investing in the rollout of an advanced fixed-line network through local loop unbundling. This investment will see BT becoming the largest unbundler of telephone exchanges in the market as it delivers up to 24Mbps broadband services to up to two thirds of Ireland's available broadband lines.

“It certainly is a challenging time. When you look at the telecoms sector in general, revenues have declined since the peak of economic activity by about 20pc and that’s fundamentally across four or five significant organisations.

“But I’m a great believer in how competition drives investment and behaviour in a market. I think the question is around the efficiencies telecoms companies can create in their own organisations and their networks to ensure they access capital to drive the next stage.

“My firm view is the private sector should be driving the bulk of that investment and competition should also drive that. I think you’ll always have areas and regions where that’s not possible and we’ll be looking for Government support to do that. The National Broadband Scheme (NBS) is the start and a good example of that. It is being rolled out efficiently and on time and that will really help rural areas. But it is likely we’ll need further investment to ensure that equity exists across the whole country.”

Sutherland believes that despite all the league tables Ireland is served with decent bandwidth in urban areas.

“Realistically the business case doesn’t exist to put fibre into every home in the country but I also think there are things that can be driven by the private sector where we can drive fibre deeper into rural areas and to mass sites of the mobile operators.”

From a situation two years ago where BT would have been competing in the consumer market for phone services and broadband, the company is now very much a key wholesaler to most of the other telecom providers in the Irish market.

“Mobile networks are becoming more fixed by their nature; they’re becoming more fibre-rich to satisfy the demand that is out there now. To me that’s the patchwork that needs to take place, driving fibre deeper into the existing mobile networks and using the last mile from a mobile point of view in rural areas to provide the level of broadband the country needs.

“I think BT has a critical role to play here and that was one of the drivers behind our decision to do the deal with Vodafone and exit the retail end of the consumer market.

“It is about giving retailers choice, enabling them to offer alternative services in a more competitive environment. The fact that we are no longer directly competing with retail competitors is important because it adds a level of trust.

“There is no question Ireland lagged way behind many European countries in that sense. The frustration of not being able to use that as a competitive tool really has been disappointing. There’s no doubt it impacted consumers.

“We are unbundling local exchanges as we speak and looking to provide choice to wholesale customers to compete in the market and ultimately that’s going to benefit consumers and the SME market.”

Looking to the future, Sutherland believes consolidation of the telecoms market in Ireland is unavoidable.

“This is a credit to the Government and ComReg who have fought hard to create that environment and I think the general trend is now an acceptance that it’s a good thing and it works for Ireland.”

BT is a stalwart investor in the Young Scientist Exhibition and recently expanded this to include a Business of Science and Technology Programme to mentor young entrepreneurs.

Sutherland believes there is a need to encourage innovation and entrepreneurship in young Irish minds. “There is a lack of digital infrastructure and bandwidth to schools, which I think our sector has a major responsibility to try and facilitate, and also there is a lack of commercial skills in young people in how we facilitate the transition from education to business.”

On the economic front, Sutherland doesn’t believe Ireland will be hit by a double-dip recession. “But I do think the economy is going to be exceptionally challenging for the next two years. A lot of businesses still haven’t become as efficient as they could do.

“If we’re going to compete on a global scale, whether to attract investment or export, we need to be more efficient and we are trying to do that in our own organisation. I think it is really important that Ireland completes that exercise and becomes an efficient, competitive economy again.

“Unfortunately that’s going to involve more cost cutting in the next two years, I’m certain of that. But to take advantage of opportunities that arise and invest in them, we have to be as efficient as possible, whether on an individual company basis or as an economy as a whole,” he warns.

To see a video interview with Graham Sutherland, go to www.digital21.ie

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