The Government should purchase telecoms services from a number of firms rather than a single provider to promote more competition in the Irish market, according to a new report published yesterday by Forfás.
The Government should also put additional pressure on Eircom to reduce the prices it charges competitors to use its local telecoms network, the report says.
The State's policy adviser on enterprise and technology said the two measures were needed to overturn a serious broadband deficit that is continuing to undermine the Republic's competitiveness.
Forfás's Broadband Telecommunications Benchmarking Study shows that, despite recent progress in the rollout and uptake of broadband, the State has slipped further behind leading broadband nations.
The report, which is Forfás's fifth update on broadband, shows that the Republic is ranked 18th out of 21 states for overall take up of the technology, ahead of only Greece, the Czech Republic and Hungary.
Forfás says that, compared to the average countries in the study with 11 per cent broadband take up, the Republic lags behind with just over 2 per cent take up by the public.
This result implies that the State has a deficit of about 360,000 broadband connections and would have to install about 700,000 connections by 2007 to catch up with the leading broadband nations.
The key reasons for the State's poor performance is a lack of real growth in competing technologies or competition and innovation within the Irish digital subscriber line (DSL) market.
The report recommends that the Government use its purchasing power to promote competition in the broadband market from 2005 when new telecoms procurement contracts arise.
Currently, Eircom supplies the majority of all fixed-line telecoms services through an exclusive deal struck with the State more than two years ago. This deal is worth more than €100 million per year to the incumbent operator. Forfás recommends that procuring advanced services from a range of providers would promote the rollout of infrastructure and broadband competition.
The State's policy adviser also criticises the high prices Eircom charges rival telecoms firms that want to use its local access network to provide their own broadband products.
"Ireland will remain the highest in Europe for unbundled line prices and these high prices will continue to curtail innovation in broadband," it says.
The regulator, ComReg, should continue to put pressure on Eircom to reduce the "unbundling" charges further for other companies to provide a range of innovative services, concludes Forfás.
The report also recommends that ComReg should review the broadband spectrum usage with the objective of encouraging operators to maximise the use of spectrum for new wireless internet technologies, such as WiMax.
