Mr. Alex Chisholm:

I thank the Chair and members for the opportunity to appear before the committee today to discuss our accounts and activities. As chairperson, together with my fellow commissioner, Mr. Kevin O'Brien, I will be very happy to answer any questions members may have in the course of the morning session. I will provide members with a brief overview of our work and in particular on key financial and governance aspects.

The Commission for Communications Regulation, known as ComReg, is the national regulatory authority for the electronic, communications and postal sectors. We were established in 2002, taking over the functions of the Office of the Director of Telecommunications Regulation set up in 1997. ComReg also manages Ireland's radio frequency spectrum and the national numbering resource and regulates the emergency call-answering service, among other activities. Our overall responsibilities are to promote competition, protect consumers and encourage innovation. Members may recall that ComReg recently held a successful auction of radio spectrum for next-generation mobile telephone licences. This will raise €854 million for the Exchequer between now and 2030 and the auction also will allow mobile companies to roll out high-speed mobile communication services from this year. I also wish to inform members, and I am aware the Chairman tabled a parliamentary question on this subject before Christmas, that €450 million of these auction fees were forwarded to the Exchequer on 14 December last year.

In terms of our overall mission, the successful spectrum project illustrates in part the kind of work in which ComReg is engaged daily. Our overarching aim is to facilitate the development of a competitive communications sector in Ireland that attracts investment, encourages innovation and empowers consumers to choose and use communications services with confidence. To do this, we set regulatory frameworks and we undertake regulatory projects, which often are lengthy and complex, as well as making regulatory interventions, for example, to enforce rules. I will outline our four principal goals, as set out in our strategy statement for the period 2012 to 2014. First, our aim is to safeguard the interests of the consumers of communications services by protecting and empowering them. Second, we apply effective and proportionate regulation to facilitate dynamic and sustainable competition. Third, we provide regulatory certainty that facilitates innovation and supports investment in communications infrastructure and services. Fourth, we aim to be a highly effective and innovative organisation ourselves and to provide a centre of excellence that supports and enables all the people who work in our organisation to achieve the objectives set.

Turning now to funding and operations, ComReg does not receive any funding from the State. We receive, as members heard from the Comptroller and Auditor General's introduction, levy income from the electronic, communications, postal and premium rate services industries that we regulate and, in addition, we receive licensees and spectrum access fees from firms and individuals, mainly firms, using radio spectrum licensed under the Wireless Telegraphy Acts. Income in excess of our costs is treated as surplus and handed over to the Exchequer. Since the establishment of the organisation in 1997, we have passed over more than €820 million in surplus to the Exchequer. At present, ComReg has a staff of 107 persons. This is comprised mainly of professionals, engineers, accountants, legal staff, economists and analysts who have the skills and qualifications needed to undertake economic regulation. Where necessary, we complement the efforts of our own staff with specialist technical advice from suitable external agencies. Staff costs, technical advice and outsourced services make up the majority of our cost base, which we have been able to reduce in each of the last two years.

Our income for the year to 30 June 2012 was €57 million, while expenditure was €22 million, leaving a surplus of €35 million. Members have just heard the figures for the previous year and the surplus in that year was approximately €30 million. Consequently, our income continues to grow and our expenditure to fall and that obviously expands the surplus as a consequence. I should mention that the figures for 2012 are subject to ongoing audit at this time by the Comptroller and Auditor General. In addition, I should highlight that this improvement in income and reduction in expenditure is for the second year running.

Our costs are kept under continual review to ensure we are achieving value for money. We have achieved savings through initiatives and plans that have been identified in accordance with ComReg's Croke Park agreement action plan. Based on this and on audited figures for the year to 30 June 2012, we reduced our total costs, excluding legal costs, by 6% and this represents a decrease of approximately 14% from the comparable figure in 2008. We continually review and update as necessary policies and procedures in respect of expenditure, procurement and risk management.

In respect of governance, it is ComReg's policy to comply with the code of practice for governance of State bodies and it reports on its compliance with relevant sections of the code either by annual reports or separately by a letter to the Minister for Communications, Energy and Natural Resources. Moreover, we have an extensive internal audit programme in place. It is overseen by the audit committee, which has a majority of external members and which met four times during 2012. Accountability and transparency obviously are central to the work of economic regulators, as again we heard in the introduction. We are keenly aware of this and we make sure that we fully comply with the extensive accountability provisions in the Communications Regulation Acts 2002 to 2011, which lay down specific requirements, for example, to conduct open consultations prior to making decisions, to report to Ministers and the Oireachtas on various matters and to bring certain other matters before the courts.

In 2012, just to highlight a couple of activities, overall it was a very productive year for our agency and members may have seen our written submission, which included a review of that year. I will highlight some of the projects we have completed which have had significant economic value, such as the multiband spectrum auction, which I mentioned earlier. However, of almost equal importance, I bring to members' attention the new regulatory frameworks we have put in place for next generation broadband, which is the basis on which companies are investing extensively at present to improve the level of broadband service here. In addition, I refer to the pricing of bundles and the pricing of both fixed and mobile termination rates, which again make a considerable impact on the market and will collectively, in our view, help to reshape the market towards an even more competitive and high performance future. Last year was also the year in which ComReg brought into force a new code of conduct for providers of premium rate services to give more protection to users of such services, including for the so-called double opt-in, which has been addressing an area of significant concern.

In 2013, obviously some of these activities will continue but we also have some new ones. We must make a firm decision in respect of spectrum trading and we must introduce a price control for universal postal services over the next five years. We must develop further our plans for various new spectrum assignments, including valuable bands, such as the 2.6 GHz band, and we have a number of consumer initiatives in respect of broadband speeds. As ever, we continue to refine and, importantly, to enforce existing regulations. I thank the committee for giving ComReg the opportunity to outline its activities and I am happy to answer any questions members may have.