In response to recent comments about the value for money of Mayo’s Metropolitan Area Networks (MANs) in Ballina and Kiltimagh, Conal Henry, CEO of e|net takes a closer look at the project.
The MANs are high capacity fibre optic cable laid in urban areas. In the first Phase of the roll-out two MANs were built in Mayo – one in Ballina and one in Kiltimagh. The second phase is still being commissioned and will see networks laid in Ballinrobe, Knock (Airport) and Claremorris.
Nationally the MAN programme has been acknowledged by most experts to have made a major contribution to the improvement of telecommunications infrastructure in Ireland at a time when there wasn’t enough investment in new telecoms infrastructure like fibre optic networks. Last year, a value for money review of the MANs by the Department of Communications, Energy and Natural Resources confirmed that they facilitate greater competition in the broadband and telecoms markets, by allowing smaller telecoms companies easier entry, and, as a result, the help lower telecoms costs in the MANs cities and towns.
The MAN supports the employment of at least 325 manufacturing jobs in Ballina by providing world class, low cost and resilient access to a range of communications services over fibre. As a general rule of thumb, it is accepted that for every single job in manufacturing, a further three other jobs are supported in the same community. These services are critical in retaining the type of high quality long term employment that are regional centres depend upon.
Ballina has a world class telecoms infrastructure and companies can operate there and compete successfully in the global market. If the MANs weren’t there, who knows what would happen.
There is strong statistical evidence to show that the vast majority of IDA job creation occurs in MAN enabled towns. In fact, in 2007 89% of all IDA created jobs occurred in MAN towns. There is no doubt that MAN-enabled towns are getting significant competitive advantage in terms of IDA job creation. The 27 MAN-enabled towns have increased their share of IDA inward investment from 24% in 2004 to 89% in 2007. Simply put, these towns are now habitually getting the vast majority of new FDI. While the MANs don’t create jobs on their own – they remove a key barrier to those who would wish to invest in regional Ireland. Research undertaken by e|net last year revealed that 32,000 private sector jobs rely directly on the MANs for communications.
The IDA themselves are unequivocal in their view that the MANs have provided their client customers with much greater choice, service and better prices when it comes to broadband and general telephony connectivity and that they have contributed significantly to the competitiveness of regional Ireland .
With the MANs sparking more competition and driving regional connectivity, the Government themselves are reaping the benefits of reduced telecoms bills. e|net estimates at least a 20% reduction cost to the taxpayer for each of the State’s telecom tenders as a direct result of MAN based competition. It comes as no surprise that there is a significant amount of Government business on the MANs, with the amount of Government connections increasing on an almost monthly basis. In the case of Ballina, the Department of the Environment, Heritage and Local Government has a connection to the MAN; not only creating local employment but also conducting vital public services.
In a relatively short period of time, the MANs are delivering and are helping to drive down the cost of broadband, as well as introducing new product offerings into regional Ireland. They have broken the single supplier dependency and provided real choice and real competition. The Government, like all other end users, is seeing the benefits of this.
Thankfully, telecommunications is one area where the competitive landscape is evolving on an ongoing basis. In tandem with this increased competition, costs are becoming increasingly keen and are greatly reduced from a few years ago with the MANs proving to be a vital impetus in driving competition and lowering costs. Concrete proof of this increased competition is not only demonstrable by the MAN based regional strategies initiated by authorised operators but also with increased Local Loop Unbundling. Pre MANs, Local Loop Unbundling (LLU) was effectively impossible outside of Dublin with a meagre 1 exchange unbundled outside Dublin pre 2003. Now 19 exchanges are unbundled and all of them connect to the MANs.
However, talk of competition is all well and good but it is the effects of competition that are more meaningful. As the MANs continue to experience growth in use, they have been found to result in significant cost saving to operators, and therefore to end customers. In the case of Ballina, there are three operators vying for projects, which hugely increases the competitiveness of the local market. This competition and the lower prices that this competition drives simply, would not exist without the MAN.
Another feature of the recent debate has revolved around the issue of ‘backhaul’. Backhaul can be best defined as access from the MAN to a communications backbone and onwards to Dublin. As it stands, Ballina has backhaul and greatly benefits from this connectivity. In the case of Kiltimagh, however, there is no commercially viable backhaul arrangement in place and consequently the telecoms operators have not come on board.
It’s a fact that Kiltimagh has access to backhaul which is technically possible via Eircom. Unfortunately, most observers are of the view that the lack of alternative backhaul providers to Eircom is hampering the uptake by communications companies of certain MANs, Kiltimagh included. Where alternative backhaul is not available, Eircom face no market challenge, the resulting backhaul is not competitive and the MAN is under-utilised or not utilised at all.
The solution to the Kiltimagh backhaul problem may include regulatory as well as investment interventions. Alternative technologies are being investigated by e|net. These revolve around wireless point-to-point technology and could possibly bridge the backhaul gap.
In Regional development policy it is critical that we ‘front load’ infrastructure in areas designated for future development. The MANs in Mayo clearly have a role in these circumstances. The advent of bandwidth demanding applications such as IPTV (the delivery of broadcast programmes over the Internet), VoIP (the use of the internet to carry telephone conversations) and other services, like video conferencing, video-on-demand and the exchange of ever larger files, continue to support the case for high-speed connectivity.
With virtually unlimited capacity of fibre, it is largely recognised that the only true future proofed delivery mechanism allowing homes and businesses to take advantage of bandwidth intensive services now and for years to come is to deploy this type of infrastructure. In fact the MANs, by design, are technically specified to very high standards with the aim of being future-proofed to meet the expected growth in demand, so all MAN towns are best placed to take advantage of the evolving technological landscape. Fibre infrastructure will be to the information age what roads and railways were to the industrial age.