Mr. Gerry Fahy:

I thank the Chairman and committee for the opportunity to meet them I will give an overview of the mobile industry and how consumers perceive the services they get.

Slide No. 12 describes the market shares of the mobile operators in Ireland over the past five years. At the top of the graph,there is a small, but growing, segment of customers who are on virtual operators. Virtual operators do not have their own networks but sell services on other networks. In 2014, there was a large merger of Three and O2, which resulted in O2 exiting the market and reduced the number of operators with networks from four to three. The merger was considered and approved by the European Commission.

At the time of the merger, ComReg expressed considerable concerns about the effect the loss of a network competitor might have on competition. As part of the merger, Three gave commitments to the commission that it would facilitate the launch of an additional two virtual operators on its network. These virtual operators have launched in the past six months, and it is difficult to know whether they will have a significant competitive effect. The intention is that they will. At the time of the merger, ComReg expressed concerns that the competitive effect may not be sufficient. We are waiting to see the degree of competitive effect and whether the competitive intensity returns to where we believe it should be.

One of the proofs of competition is how price evolves in a market. The next slide shows how, over a number of quarters since 2013, both contract and pre-paid customer average revenue, which is a proxy for price, has changed. During the period, it has declined by 8% for both contract and pre-paid customers, which is positive. Over the past two or three quarters, this progress has slowed and reached a plateau. This is not due to lack of competition but to the fact that people are using more data services than before. More than 80% of customers have pre-paid phones, which are excellent at providing access to data services.

The next slide dramatically shows how data services have taken off during recent years. The green line, which rises from the bottom left to the top right, shows that during the past five years, data services have increased by 500%. It is a very significant and rapid increase. The blue line on top shows how voice minutes on the mobile networks have changed in that time. They have increased slightly, probably because people are switching off their fixed networks and depending on mobile more as their sole means of voice communications. The dramatic feature is the data service.

In 2012, ComReg instituted a multi-band spectrum auction, which released new spectrum into the market and repurposed the existing spectrum to be allowed to be used for higher-speed data services. This led to the launch of 4G services in 2013 and the wider proliferation of 3G services. From then, data growth has taken off significantly and represents the usage that the commissioner, Mr. Jeremy Godfrey, talked about in terms of social media, watching videos and doing all sorts of things online with one's smartphone.

The slide shows that spectrum is the lifeblood of the mobile and wireless networks. We give them capacity and coverage by assigning them spectrum. The next slide shows how spectrum assignments will develop over the coming period. On the left, a box represents the amount of spectrum available for the operators, and all 5 million mobile users today are camped on this amount of spectrum and use their services using this spectrum. With the rapid growth in data, ComReg sees it as essential to release more spectrum into the market. It is also under significant obligation to the European Commission to do so given that mobile broadband usage, and broadband usage generally on wireless, is seen as a very high-growth area for society. The evidence of this is on the previous slide.

This year, we will increase the amount of spectrum available for high-speed, broadband wireless services by 86% by instituting a new auction for spectrum to be assigned into the market. This spectrum will be suitable for both higher-speed services in cities and through our regionalised structure, for regional operators who want to offer fixed wireless broadband services in rural areas and offer services that are very competitive with the higher-speed services available on fibre.

Over the longer term, we hope to add another 52% to that tranche of spectrum which will, again, uplift the capacity and increase the potential coverage opportunities in rural areas. A significant amount of work is under way in ComReg to add more spectrum to the pool to allow the market operators to choose where to use that spectrum, how to use it to compete against each other and offer better services to consumers.

ComReg does much research into how consumers perceive the services they receive from the market. Between 2013 and 2015, we tracked how customers think about mobile phone, home landline services, fixed broadband services and mobile broadband services. Across the board, between 2013 and 2015, customers expressed increased satisfaction with services with up to 90% in the case of mobile services and 74% in the case of mobile broadband services. While this is positive, one must bear in mind that 10% of mobile customers are still not satisfied. What does that represent? That represents approximately 500,000 people nationwide who may still be less satisfied than they should be or dissatisfied with their service. That obviously is a concern.

When we look behind the data and ask what would make somebody move operator, the most pressing issue that makes people most dissatisfied is price. This outweighs every other issue when it comes to service. When we examine how a basket of telephony services has fared against the overall consumer price index, consumers of communications services have fared quite well with an 8% price improvement against the overall consumer price index. That is a good example of how competition, regulatory action, etc., have improved the lot of the customer.

Price is not the only issue in which the customer is interested. ComReg, ensuring customers get the best service, has a call centre function through which it tracks customers which raise issues. From tracking the statistics, we note year-on-year overall contact issues with ComReg have come down 15% from between 2014 and 2015. This breaks down into various issues. The major issue raised is around billing and disputed charges, an issue which does not change much year on year. Contractual issues raised with us have come down 22% year on year and service issues down 15% year on year. Customers are seeing improved interaction with operators. ComReg now publishes complaint levels by operator and will be doing so quarterly from now on. We hope this will cause operators to get even more concerned about the service they offer customers.

We also take a lot of actions in the market to support the customer getting the best service, ensuring they get proper services and the service they have been promised. We have undertaken various court actions against operators in this regard. They have received fines and pleaded guilty to various offences such as charging people for services not delivered. Over the past several years, we have ensured customers have received rebates of €1.6 million and operators have received fines and court fees of approximately €3 million. This is a lot of good work in support of the consumer.