Mr. Jeremy Godfrey:

I thank the committee. I appreciate it is under time pressure and, therefore, I will be as brief as possible and skip over some of the slides.

I will focus on the wholesale broadband markets, which, unlike retail markets, we regulate. ComReg's objectives in regulating them are to ensure end users get the benefit of choice and competition, as well as the benefit of efficient investment in new networks and services, as my slides will illustrate.

ComReg made a major decision in 2013 about what the rules should be for the wholesale access to Eir's high-speed network, which we are now rolling out. We had the objective of promoting competition and so on. Since then, one can see that the speeds available and taken up by consumers in Ireland have increased. The red line on the slide shows the speeds greater than 30 Mbps. When we made that decision in 2013, it was a little under 30%, whereas now almost three quarters of all users have speeds above 30 Mbps, according to our latest figures. One should acknowledge that while the commercial roll-out that has enabled that increase to happen has been in an area of the country where it is commercially viable, there is another area where it has not been commercially viable for Eir or its competitors to roll out high-speed broadband, which is the subject of the Government's intervention programme and which is a matter for it rather than us.

I mentioned that the provision of competition and choice was one of our objectives. As one can see on the slides, competition has also developed over the same period since 2013. There has been a growth in the market share taken by Sky, which is the dark blue line second from the top, and growth in the share taken by Vodafone, largely at the expense of the two largest players in 2013. Vodafone's and Sky's ability to compete in the market depends greatly on their use of Eir's network. If not for the rules that ComReg had put in place to ensure access to those networks, we would just have the two big players, Virgin Media and Eir.

In terms of the platforms, one can see the roll-out of the investment by Eir. Virgin has also slightly extended its network. It has also increased the speeds over that time. One can see from the chart on slide 5 that the number of customers using the higher-speed service platforms, represented by the light blue section of the chart upwards, has grown while the number of customers using the lower-speed platforms has fallen. Again, it is interesting to note that the two blue sections of the chart both represent Eir platforms. That shows how there has been a shift from Eir's lower-speed services to its higher-speed services in both its retail business and the services used by wholesale customers using Eir's network. The last thing to talk about, which I know was discussed at the previous sessions the committee has had on this topic, is the fibre to the home service, which is represented by the red bar at the very top of the chart. That has really only just gotten going. Some of that is Eir's fibre to the home service in rural areas and some of it is provided by SIRO in some of the second-tier towns.

There was a comment made in a previous session of the committee about whether ComReg might be too pro-competition and not pro-investment enough. We do not think there is a tension between the two. One of the biggest incentives to invest is the need to meet competitive threats. I am sure that Deputies get complaints from constituents about unavailability more often in areas in which there is less competition rather than areas in which there is more. That has certainly been our experience. One can see that the investment figures have held up very well over that time. Investment can be a bit cyclical depending on what is going on in the marketplace, but there is no evidence at all of investment being deterred by regulation. Of course, in the last few months, we have seen an announcement by Eir of a further big investment programme in fibre to the home services in urban areas.

I want to give a little bit of context about how we regulate. The way we regulate the wholesale markets is set by the European framework. There are really three questions we have to answer. We have to look at the wholesale markets and see whether there is any operator in those markets which has significant market power. That means ascertaining whether there is an operator that could do what it likes without having to worry too much about the impact of competition on it. If we find an operator that has such significant market power, we must think about the problems that could cause and how we can remedy them. The way we remedy the problems is by requiring such operators to allow competitors access to their network. We set a number of conditions about how that access is to be granted. One of these, which is very important is a condition on how prices should be set. I will not go through all the steps on slide 7 but I will observe that there are many steps to be gone through. There are a lot of data, it is a very painstaking process, and there are a number of consultations and other people involved. It can take a bit of time to do but once we have made our decisions we move to the box on the right of the slide, which refers to monitoring what is going on, checking that Eir is complying and enforcing when it does not. Those are extremely important tasks for us. We also update the remedies, particularly the pricing remedies, as the data change.

We got to the next-to-last stage, which involves notifying our decisions to the European Commission. Those notified decisions are public. I can tell the committee that just a few hours ago we got comments back from the European Commission. As it has no serious doubts and very few comments, there will be no delay as a result of that process. We expect to make those decisions final within the next week or two. As for what we are proposing, it includes the usual remedy of Eir having to provide access to third parties that want to use its fibre, its copper networks and its ducts and poles. The second proposal, that Eir must act in a way that does not discriminate and must treat its own retail business in the same way as that of third parties, is very important. That was also a big issue in some of the committee's previous hearings on this matter. The other thing I will comment on in respect of slide 8 is that we are planning to remove regulation from some parts of the market. While we will continue to regulate the last mile, the connection from the telephone exchange or from the exchange to the customers' premises, previously we had also regulated the backhaul from the exchanges to the central part of the network. We are reducing the area in which we are imposing that regulation.

I wanted to talk specifically about prices because that was also something that had come up. We are proposing to reduce the prices charged by Eir for the use of the last mile of its network. We are moving the basis of regulation. Previously Eir had a lot of flexibility on the price it charged as long as it left enough room between its retail prices and its wholesale prices for competitors to make a margin. For the fibre to the cabinet service, we are now changing that and setting the precise price Eir is allowed to charge. Those prices will come down in comparison with what Eir is currently charging.

I will talk a little bit about the fibre to the home connection charge, which was raised in the two most recent sessions. At the moment, Eir is free to set that charge as it wishes, again subject only to the rules on there being a sufficient margin between wholesale prices and retail prices. We have been concerned about that charge however. At the last hearing, Eir informed the committee that its cost of connecting a premises was €450 on average. ComReg has not verified that number but we will take it as correct for now. The committee asked a very good question of Eir, which was how long does the asset last. The answer given was that it lasted for 20 years. The problem was that connection charge is the best part of two thirds of the cost of the asset, which will last 20 years, but a competitor might retain the customer and the use of that asset for only 42 months on average. Therefore, there is a real mismatch between the real risk the competitor has to take in paying that proportion of the costs with no guarantee that it would retain the customer for that long. We thought that had a significant potential to inhibit the development of competition. In fact, so far we have not seen any competitors use that fibre to the home network. We think that may be one of the reasons. We are therefore changing the regulation. We are still giving Eir some flexibility about the charge, but we have changed the rules. We think that the amount it will charge might be in the range of €80 to €150. It will still have some flexibility.

The last thing about which I will talk, which again came up in previous sessions the committee has had, was about ComReg's staff and powers. It is quite unusual for regulated entities, that is, organisations being regulated, to ask for the regulator to have more staff and more powers. I have to say that we agree with them. We think that if we had more staff we would be able to move more quickly, do more things and fulfil our remit, which is very broad, a little better. Equally, we think that having adequate deterrent powers is very important. In other sectors and in other member states it is common for regulators to have the ability to directly impose financial penalties. We have been discussing both these issues with the Government. They are both regarded as high priority issues. Of course we recognise that, particularly on the issue of staff, there are wider public policy issues at play in terms of the overall size of the public sector. Therefore, just because we think we need something, it does not mean that it is the right thing for the Government to do. The ultimate decisions on these issues will, of course, be a matter for the Government. The question of powers will ultimately be a matter for the Oireachtas. That was a gallop through the slides.