Momentum in the broadband market has gathered pace with a raft of acquisitions, joint venture and strategic alliance announcements of late.
ESB and Vodafone have embarked on a joint venture to invest €450 million in a 100 per cent fibre-to-the-building broadband network offering speeds from 200 Mbps to 1000 Mbps across 50 towns and 500,000 homes and businesses. Mobile network operator, Three has just completed its acquisition of O2 and the company has also recently signed a 4G network sharing agreement with eircom to run until 2030.
Should businesses be concerned about this level of market flux and does increased consolidation weaken competitive forces?
Not according to Liam O’Kelly, CEO with AirSpeed Telecom. “It’s good news for the customer,” he said. “It’s still an aggressive and competitive marketplace that’s seen a lot of driving down of prices which has benefitted the customer. I think the challenge is for us as suppliers to be able to continue to provide innovative products and technologies in the face of falling prices and to deliver high capacity bandwidth along with strong service level agreements (SLAs).”
O’Kelly believes that the ESB/Vodafone alliance in particular will add additional wholesale products to the market which will filter down to the end-user.
David Hughes, head of enterprise sales with pan-European telecoms company, Viatel agrees and sees the joint venture as an “opportunity to create a new access mechanism for broadband into the market that will be good for everyone”.
But Hughes is also keen to point to other positive moves in the market, citing Viatel’s intention to extend its own fibre infrastructure, cloud services and data centres with a €125 million investment supported by funding partner, Proventus Capital Partners.
“We’re not a big global organisation and we’re not an eircom,” he said. “But our decision-making is quicker, our responsiveness more agile and if a company is looking for connectivity in Ireland and across Western Europe, we are as cost-competitive as any other operator, with more flexibility and a better service wrap,” he said.
According to the latest market report released by ComReg, there were 1,696,878 broadband subscriptions (fixed and mobile) in Ireland in Q2 2014, a decrease of 0.3 per cent since Q1 2014, but an increase of 1.9 per cent since Q2 2013. On the fixed line side, there was also an increase in subscriptions in Q2 (up by 13,320), but mobile broadband subscriptions fell again (down by 18,156 subscriptions).
Ben Kitchin, director of Host Ireland Business Broadband believes there is very little choice in the market and an over-reliance on some of the bigger service operators.
“I think the smaller providers play a hugely important role in that they add a significant aspect of competition to the industry. We’re a bit more footloose, able to react a lot quicker and design new products and services for customers who require something a little different.
“We provide connections of up to about 350 Mbps and we open this up to customers. It’s the same principle behind electricity. We thought the market was totally over-priced when we came into it so we slashed prices by 50 per cent. We’ve had a huge amount of business move over to us,” he said.
But not all agree with Kitchin’s assessment of the market.
Jonathan Rutherford, head of enterprise marketing with Vodafone believes there’s still lots of choice in the market, on fixed and mobile.
“If you think about mobile broadband for business, you’re now getting double the amount of data you would have got a year ago, on 3G and 4G technology. From a value perspective, it’s a business broadband product with Quality of Service (QoS) on the network, which means that businesses get a higher grade of connection.
“Increasingly, you’ll see more and more value with bigger networks and 4G coverage across the whole country,” he said.
Whatever the case, it seems ComReg has a close eye on market dynamics. In its ‘Strategy Statement for Electronic Communications to 2016’, it commits to promoting “sustainable competition, in particular in less densely populated areas, through effective and up to date wholesale remedies, by ensuring competitive investment occurs at the deepest level possible and by seeking fair and vibrant competition with no distortions in both the mobile and fixed markets”.