The Ascent Of MANs

Press release
30th Nov 2006

e|net chief executive Conal Henry tells Brian Skelly that, on their own, the MANs cannot solve the regional broadband issue.

Some chief executives like to shake things up when they take up a new position. Others prefer a softly, softly approach that puts the emphasis on continuity and gradual transition. Conal Henry certainly falls into the latter camp.

Since his appointment as chief executive of e|net in April this year, the phrase business as usual could best describe his industrious but low-profile approach to the job.

Limerick based e|net is the company that manages the government-funded metropolitan area networks, or MANs, the fibre rings whose mission is to bring high-speed broadband to the telecoms-starved regions. Under phase one, 27 networks have been completed at a cost of €80m and handed over to e|net. A similar budget has been set aside for the second phase, which is under way and expected to be completed by the end of 2007.

This phase will see the MANs extended to 90 towns with a population of over 1,500 people. e|net was awarded the 15 year service concession contract in June 2004. While the Government has not yet decided who will run future MAN networks (those stemming from phase two and three rollouts) there is little doubt that e|net will be a strong contender.

e|net operates as a wholesaler of access to the MANs. Henry says that this ‘independent wholesaler’ message is a new concept for Irish telcos to grapple with and so one of his initial priorities in the job has been to get that message firmly across. “The thing about the e|net project is that it’s the first one of its kind; there’s been nothing like this before. It’s beholden to us to be crystal clear about that it is we’re about so that it’s easy for people to understand.”

So far all the major telecoms providers with one exception have signed agreement with e|net to take capacity from the MANs. The exception is Eircom, which has gone on record as saying that is sees the MANs as an unnecessary duplication of its own network.

Eircom’s argument does not hold much weight with Henry. He argues that neither Eircom nor BT can fulfil e|net’s remit, which is to be an independent, ie carrier neutral, broker of wholesale broadband services. “One of the great advantages of our infrastructure is that it is purely wholesale,” he explains. “If you buy telecoms infrastructure from Eircom or BT you’re also competing with them whereas our customers don’t compete with us.”

Henry says he is hopeful that under its new owner Babcock & Brown, Eircom may rethink its position on the MANs. “We’d love Eircom to be a customer. They’d say that they don’t need us but we believe there are circumstances where they do. There are large areas where our fibre is over and above what Eircom has. With the change in ownership we’d be hopeful that the sort of religious, dogmatic objection to the MANs would be dropped and that Eircom would take a more businesslike approach.”

Eircom may be leaving a big hole in its client roster but e|net has plenty of other blue chip customers to keep it busy, including BT, Verizon (formerly MCI), Cable&Wireless, O2, Vodafone, UPC (NTL/Chorus) and Magnet. Some telcos may be bigger customers than others but Henry argues that the MANs have become a key part of the infrastructure for all operators. “Were it not for the MANs the dire state of regional broadband would be even more dire,” he declares.

It is a little surprising to hear the person in charge of running the infrastructure that was touted as the solution to the regional broadband crisis as saying that the crisis is still there. But the reality is that the MANs are just rings of fibre and there needs to be some mechanism to bring them together into a national fibre network. That mechanism Henry believes, is to link the MANs to other state-owned fibre such as that run by ESB, Bord Gais and Iarnrod Eireann, overlay it with wireless solutions to reach remote areas and with unbundled exchanges to increase competition with Eircom. This, he argues, would in turn give Eircom the impetus to invest in its own network more heavily to the ultimate benefit of end customers.

Insufficient backhaul is one of the reasons why such an alternative network is necessary, says Henry who explains that while most of the existing 27 MANs receive adequate backhaul through BT or ESB Telecoms, backhaul is a problem for four MANs and “it’s very difficult to do business on them” as a result. During phase two, backhaul will become an even more important issue, he says, because without backhaul “it’s very hard to make a case for this infrastructure”.

Another of the challenges facting e|net is boosting numbers of direct-connect customers. While telco usage of the MANs is at a very healthy level, the number of directo connections to end users has been disappointing, especially among government custiers. This is something Herny would like to change, noting that at present the MANs are used to carry less than half a percent fo government telecoms traffic.

Simlarly, the economics of digging fibre means that only businesses that are within 50m of that MANs and that have a telecoms spend of over €1,000 per month can afford a direct connection. So while large US multinational and call centre operations might tick these boxes very few small to medium-sized enterprises (SMEs) would, and this is an imbalance Henry would like to correct. He says that e|net is currently in discussion with the Government to look at “creative ways to resolve the last 25 metres issue” and make MANs more widely available to SMEs.

Such challenges are all in a day’s work for Henry who so far has been delivering results from e|net. The company’s revenue of €3.8m last year is expected to double in the current financial year. Overall he declares himself very satisfied with how the MANs are performing and believes they are providing a valuable service to the telecoms community.

“There was an unrealistic expectation that the MANs project was going to solve the broadband problem once and for all but it was never intended to do that and never capable of doing that. What it was about was enhancing the competitive platform outside Dublin and it has done that. You have all these telcos using us and reducing their prices in the regions in a way they haven’t been able to do before.”