Irish Telephone Operators
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Re-structuring needed to tackle Eircom dominance says ALTO
May 2005 - ALTO Press Release
Tom Hickey, the newly elected chairman of ALTO, the association representing alternative operators in the communications market said today that despite various actions taken by ComReg, regulation has failed to create a competitive telecommunications market. “The experience of ALTO members has been one of delays and frustration. New and more radical solutions must be found if Ireland is to catch up with other developed countries in this regard. These solutions must include the division Eircom’s Retail and Wholesale divisions into units that are operationally, functionally and legally separate”, he said. “ComReg has been using the tools available to it”, said Mr Hickey. “however, Eircom has retained its dominance and has been able to frustrate the efforts of competitors”. In a detailed document submitted to ComReg, ALTO claims that Eircom has retained its dominance in several critical markets, including holding:
87% of the domestic calls market
99% of the lower level access market
77% in the higher level access market
68% of the international calls market
80% (revenue) of the market for the minimum set of leased lines
70% of the call transit market
80% of the wholesale market for call termination
100% of the market for copper local loops.
In the document, ALTO claims that if Ireland is to remain competitive and boost productivity, then it needs a vibrant competitive telecommunications sector. “This level of market dominance is not just bad for the telecommunications market it is bad for the economy. Competitive modern telecoms a key factor for inward investors”, said Mr Hickey.
Government has targeted Broadband availability and take up as a priority, however Ireland currently lags well behind our nearest competitors in this regard. For example, Northern Ireland enjoys 100% broadband availability while Ireland will only achieve 90% availability by the end of 2006. Penetration and growth rates remain below what is required to catch up with competitor countries. “Unless we have a radical change in competitive conditions soon, the Government target of 400,000 users by the end of 2006 will not be met. We need situation where new providers can connect up their customers and compete”.
“The experience of ALTO members has been one of delay and frustration”, he continued. “All of the major regulator-mandated products provided by Eircom to date have experienced difficulties. The latest example of this is local loop unbundling (LLU), where Eircom and ComReg are currently engaged in a High Court review as a result of a request by new operators to have certain products and facilities provided in a coordinated manner. This has led to several months delay already. “If independent operators are to invest, develop their products, and be successful, they need the owner of the local loop to assist rather than impede them. Eircom is currently incentivised only to impede LLU operators. Similar difficulties exist across a range of products and services.”
Mr Hickey concluded by saying that the only solution to the current issues facing the market is to separate Eircom’s two entities – one controlling and managing the infrastructure and the products carried on it and the other being the retail provider of those products. “This is the only way that Eircom can be incentivised to treat all users of its products and infrastructure equally”, said Mr Hickey. “This would mean that it would be in the wholesale business’s interests to offer access to as many retail operators as possible and to invest in its network infrastructure to enhance the products available to them”. “The quickest, though not the most effective, means to achieve this would be with the cooperation of Eircom itself”, Mr Hickey continued. “Eircom could establish new operating companies and transfer the relevant Access, Wholesale and Retail assets as appropriate. The core monopoly facilities could then be run by the separate operating company at arm’s length from Eircom Retail. This would bring considerable benefits to Eircom by allowing for the easier removal of regulation from retail markets as they became competitive. “In the absence of Eircom voluntarily undertaking such separation ALTO believes the State must examine the option of forced separation. ALTO is aware that this will be a difficult task, and it is not clear at this time what legal instruments can be used to give effect to such separation, however it must be examined as a priority. Independent operators must have equivalent access to the core facilities if Ireland is to develop a leading competitive telecommunications sector, and the evidence shows that this will not occur while Eircom remains as a single operating company dominant in multiple markets. ALTO has called on ComReg and Government urgently to examine the options available for such an involuntary separation.”
Ends
ALTO's members include :
Budget Telecom ALTO's website is available at www.alto.ie
Cable & Wireless
Chorus
Colt Telecom
Conduit
Energis
EsatBT
ESB Telecoms
MCI
Meteor
NTL
Swiftcall
Smart Telecom
VarTec Telecom
