Irish telecom may join major carrier to bring broadband to regions

A major international telecommunications carrier and an Irish firm are considering providing broadband connectivity to the Irish market, particularly to the regions.

It is understood that a leading "tier one" carrier and a smaller carrier, Waterland Networks may co-develop a fibre network that would route through Europe rather than through Britain. The tier one carrier is understood to be a new entrant in the telecommunications sector here.

The two have commissioned a comprehensive report on international capacity in the Irish broadband market, which highlights several concerns about the existing market but also pinpoints opportunities for development.

The report, prepared by Dublin telecommunications consultancy Broadband Solutions, concludes that two major concerns exist about the State's existing international network. The first is cost.

"A high capacity link between Dublin and Cork costs approximately €470,000 (£370,000) annually as opposed to approximately €174,000 for a link from Dublin to Paris," said Mr John Sharpe, managing director of Broadband Solutions.

He also said the fact all existing Irish international connections were routed through Britain raised a second concern about "security and resiliency issues". This situation "puts Ireland into the net of the UK/US Echelon eavesdropping system," he said.

Echelon is a sophisticated and secretive surveillance system, established by Britain and the US, that tracks electronic communications. The two countries denied its existence for many years but a recent European Parliament report confirmed Echelon's presence.

The report lists concerns for European businesses and recommends they take steps to protect all communications (see http://cryptome.org/echelon-epmr.htm). Mr Sharpe said a fibre cable linked to mainland europe would bypass Echelon.

These "two areas of concern are equally two areas of opportunity", said Mr Sharpe.

The opportunities, as outlined in the report, are that a new broadband operator could extend an international fibre system out of Dublin and into the main regional cities. But doing this would need Government support.

The second opportunity is the deployment of an international cable directly connecting the Republic to mainland Europe. This would suit an operator already building out a major European network and the connection could come into a regional city, such as Cork, rather than Dublin.

The report suggests the State's broadband capacity, measured as the potential bandwidth provided by the existing nine fibre cables to Britain, could be fully utilised by 2004/05. The State also has two transatlantic cables running to the US, provided by Global Crossing and by 360Networks.

However, the 360Networks cable is "unlit" - not yet in use - and the company has filed for bankruptcy protection in the US, leaving its immediate future uncertain.

The Irish market for broadband is also growing rapidly, according to the report. Total revenues for fixed, mobile and broadcast markets are currently valued at more than £2.5 billion (€3.2 billion) per annum.

According to the Office of the Director of Telecommunications Regulation, the telecommunications sector accounts for 3 per cent of Irish GDP. The Irish internet and data market alone is expected to be worth more than £2.5 billion by the end of the decade, the report states.

It also looks at the likely demand for bandwidth from the many data centres in existence or under construction in the State. Some 18 are expected to be fully operational by the end of this year, and 21 by the end of 2002, although market consolidation is expected to reduce the number back to 18 by 2004.

This year, the 18 centres will utilise 36 stm-1 lines, each with the capacity to carry 155 megabits of data per second. By next year, that number will rise to 109 stm-1s, and by 2005, to 426 stm-1s, according to the report.

Total market figures for the State forecasts that 218 stm-1s will be "lit" and operational this year, rising to 736 by 2005. However, the report estimates additional available capacity of an extra 70 per cent because carriers tend to purchase excess, "unlit" capacity. Thus, total estimated available capacity for 2001 is actually 728 stm-1s, rising to 2,452 by 2005.

Costs for stm-1s varies between the existing carriers on each available route, with Esat/BT lowest on near and mid-Europe routes and Global Crossing lowest on US routes. The estimated average costs are €139,200 to Britain, €406,500 to the US, €157,750 to near Europe, €201,750 to mid Europe, and €2,565,000 to Asia/Pacific.

The Republic has had vigorous growth in the telecoms sector recently, the report states, adding that the development of broadband capacity has been helped by strong Government support.

The market is expected to remain robust and offer opportunity to a new carrier. Revenues for a new carrier offering lines at a 15 per cent discount to the existing market are projected to be $10 million (€11 million) in 2002, rising to $38 million by 2005, the report states.