Sec, Lies and Videotape



SEC
David McRedmond goes around lying to the public at will and with great skill.
There is one place where lying would place him behind bars: On the SEC filing, Eircom’s filing to the US Security and Exchange Commission (SEC).
At a time when Eircom publicly claim to have over 1 million broadband lines, that over 70% of customers can avail of broadband etc. – unchallenged by ComReg and the DCMNR who know better – the truth is hidden in five lines of SEC: A staggering 24% line failure rate reduces Ireland's standing in the international broadband league to that of a third world country. These figures translate into a disaster for Ireland's broadband future: less than 50% of Irish households can get 256k–512k broadband, even less can get "real" 512k broadband, less than 15% of the geographic area is covered, Eircom picked a few big exchanges (out of 1100) where it is cheap to upgrade, the rest of the population is kept as a cash cow for the company with extortionate dial-up and ISDN prices.
“As of 31 March 2004, we had 137 exchanges equipped with ADSL nodes installed covering approximately 1.1 million working lines. Approximately 76% of lines (841,000) connected to these nodes would be capable of carrying ADSL at speeds from 256k-512k.” - Quote from Eircom's SEC Form F20

Lies
In a written satement to the Advertising Standards Authority for Ireland (ASAI) in August 2004, on foot of an investigation for breach of advertising codes, Eircom says:
"We had over 1.1 million lines connected to broadband capable exchanges...As they are all capable of running broadband, we stand over our claim that over a million lines are broadband enabled. We reject the claim that only 50-60% of our customers can avail of broadband technology. The fact is that broadband technology is available to the vast majority of our customers."

Videotape
In a string of press, radio and TV appearances David McRedmond shows his mastery of deception and misinformation.
Here's a clip from the recent Prime Time programme.
Watch out how our master lier is spinning the fact that only 68% of lines originate from broadband enabled exchanges, and that 24% of those lines are not capable to carry broadband, resulting in a dismal broadband coverage of only 50%.
David first conveniantly rounds the figures to 70% coverage and 8 out of 10 not failing.
And then he presents this in a way that most viewers will go away with the impression: Broadband coverage is not so bad, wasn't it like 70% or even 8 out of ten? Fascinating. But watch for yourself.

Resources:

This David McRedmond article, squarely aimed at the new minister for Communications Noel Dempsey, is a risible distortion of the truth.
The way McRedmond assumes he can come away with placing the facts on their head is stunning.
Eircom has shattered the Irish Internet and Broadband future (with full knowledge of Cardinal Comreg).
The damage done will be felt for a long time to come. The stunted growth of Internet Ireland now needs a lot of attention and help. But first of all the lying men who are still doing their dirty work have to be exposed and stripped of their power to manipulate and misinform.


David McRedmond in Sunday Times Article
The Sunday Times - Business
October 03, 2004
Our comments in red.

Personal View: Eircom can’t do it all on its own

THERE has been much comment recently on the need for greater investment in broadband in Ireland to ensure as many people as possible have access to this technology.
Inevitably, the debate has focused on Eircom and the expectation that it is our sole responsibility to deliver on the needs of Ireland Inc.
This might have been a legitimate expectation while Eircom was a semi- state monopoly but it is no longer the case.

Today Eircom is a commercial company, a listed plc and one of a number of operators (albeit the largest one) in a fully liberalised and highly competitive market.
Not true. Eircom has the monopoly on the copper network infrastructure. This part is neither liberalized nor competitive.

Eircom’s obligations are to its customers and, in this context, we have clearly stated our objective: to get broadband to as many people as possible, as quickly as possible and as cheaply as possible.
The very opposite is the case: Eircom’s obligations are to its shareholders, not its customers. Eircom have done everything in their power to hinder the development of Broadband (for short-term profits with dial-up Internet charges). Their policy and strategy, and that can be proven in detail, was to bring Broadband to as few people, as late as possible and as high-priced as possible. And they succeeded. Ireland has, bar Greece (which is on another playing field, as they have no English and therefore currently not a lot to gain from or find on the Internet) the lowest Broadband penetration of the EU.
Irish Broadband development is 3 years behind the OECD average. (Forfas) And three years is a very long time in this industry.

While Eircom is no longer a state monopoly, the reality is that we are the only telephone company in Ireland investing in this type of network across the country.
Truth is: Eircom has the monopoly on the copper network. Any attempt by other companies to invest via the Local Loop Unbundling process have been made impossible by Eircom (with knowledge of regulator Comreg, who had not been given enough powers to intervene by the DCMNR).

Most of the other players in the market selling broadband are doing it on the back of Eircom’s investment.
A ridiculous claim. How stupid does McRedmont think the Minister is? Eircom sells its broadband product, others resell it. Eircom makes most of the profit. Margin squeeze is the order of the day.

Our agenda is, and has to be, a commercial one. Two years ago there was no mass market for the service;
2 years ago there was no mass market for Broadband in Ireland, because Eircom had made absolutely sure nobody would or could buy its moon-prized product (€107/month with availability limited to a few exchanges).

today 70% of the country is covered.
70% of the country is not covered!
If 70% of the country were covered, this would be an extremely poor coverage in the EU or OECD context, but due to the underinvested network, 24% of Eircom lines that originate from broadband enabled exchanges fail for broadband, leaving only about 50% availability of households. Geographical availability is below 15%.

Twelve months ago there were only 5,000 broadband customers in Ireland; today there are more than 75,000 and we will achieve our target of 100,000 connections by the end of this year.
A brass-neck argumentation. Eircom was instrumental that we had only 5000 broadband users a year ago! The Eircom 100 000 broadband connections target will leave Ireland at second last place in the EU-15 comparison and well short of the new modest DCMNR target, set for Comreg to achieve, namely to reach average EU-15 end-user broadband usage by mid-2005.

Eircom is driving the demand for the technology through a combination of intense marketing and a sharp reduction in price.
Broadband is a supply driven product. If only 50% can avail of Broadband all the marketing hype cannot change uptake. Irish pricing is still markedly above the EU average.

Today the price of broadband in Ireland is near the EU average which is impressive when you consider that we operate in one of the highest cost economies in Europe.
Not impressive at all. Irish Broadband pricing has slipped further above the EU average. When calculating the high Irish line rental price into the comparison (a customer needs the line rental to get dsl-broadband), factoring in that the Eircom broadband offer is severely traffic capped, has only got an ISDN like upload speed and necessitates a twelve month contract, then the Irish broadband customer is even more at a disadvantage to the EU counterpart, than a simple price comparison suggests.

There has been some media focus recently on the inability of some customers to obtain the service.
Another rich understatement: only 60% of lines are on broadband enabled exchanges (out of 1100 exchanges, Eircom has some 150 enabled), 24% of these fail for broadband.
Eircom’s claim to have over 1 million broadband lines is a lie. While McRedmond keeps on claiming publicly (in advertisement, in the Eircom Annual Report, in numerous interviews to radio, television and the press) that Eircom has 1 million broadband lines, Eircom’s filing to the US Security and Exchange Commission (SEC) clearly says otherwise:
“As of 31 March 2004, we had 137 exchanges equipped with ADSL nodes installed covering approximately 1.1 million working lines. Approximately 76% of lines (841,000) connected to these nodes would be capable of carrying ADSL at speeds from 256k-512k.” - Quote from Eircom's SEC Form F20
http://investorrelations.eircom.net/pdf/eircom_form20f_2004.pdf

The nature of the technology is such that the quality of the telephone line and its distance from the local exchange determine the ability to deliver broadband. This is the same whether you live in Dublin, London or Paris, or any other city, town or rural area in Europe.
Absolute self-defeating argument from McRedmont: As Broadband has got 100% availability in London and Paris and all of Northern Ireland etc. McRedmond sure would agree that the 24% failure rate in Ireland points to the inferiority of Eircom’s underinvested network. BT in the UK, using the same equipment have no distance limitations in operation for their 512k dsl service.

The view that Eircom is underinvesting is seriously misleading. The company has consistently invested at a rate above the average of its European peers.
It is no secret that Eircom is not even investing enough to balance the natural degradation of the network. None of the European peers has extracted the amounts of profits from the company as Eircom has done. Mr McRedmond may claim that eircom is investing in its network at a rate broadly in line with its European peers, however Eircom’s company filing with the US Securities and Exchange Commission (SEC) tells a different story. The filing states that eircom’s “level of depreciation charges… currently exceeds capital expenditure and is likely to do so for the next three to four years”. Eircom aren’t even maintaining the network at its current level, they’re letting it rot in the ground.

The challenge is to drive our broadband penetration level, which stands at nearly 5%.
Nearly 5% of what, please? McRedmond repeats the same unfounded statements of recent RTE appearances.
Ireland currently has a broadband penetration, measured as the OECD and the EU do, of under 2 broadband subscribers per 100 inhabitants, second last place in the EU-15. EU-15 average is currently at 7.2 broadband subscriptions per 100 inhabitants.
Ireland currently has a “household penetration figure” of 2.6% (only 37% of Irish households have an Internet connection, only 7% of those connect via broadband – according to latest Comreg figures). Second lowest in the EU-15, where the average level of household broadband penetration is expected to be at around 20% by the end of this year.


The issue we should focus on now is how we bring the technology to those parts of Ireland where it is currently commercially not viable for an operator to deliver the service.
This, in my view, is where the government could direct funds, in partnership with Eircom, to complete the job of rolling out the service to everybody in Ireland.
That is what is happening in Northern Ireland (between the government and the incumbent telephone company) and it can happen here.
Nice stark and indecent proposals from McRedmond: Give us financial reward for not providing broadband! Currently it just emerges that the gov had secretly offered 1.8 billion to Eircom, but they declined and preferred to ransack the company instead of investing.

Government can also help by designating Eircom as an essential service, so that every new housing estate or business park has access built in (which Eircom will invest in) for telecoms infrastructure.

For Eircom’s part, we will continue to drive the momentum around broadband and continue to invest in the telecommunications infrastructure.
While our commitment is to our customers, Eircom can’t be solely responsible for 100% availability of the technology. By working with government we can help to make it a reality.
The latest revelations about how Eircom rejected a secret 1.8 billion state investment broadband roll-out scheme in favour of extracting half a billion for the benefit of its ownwers should put these claims to rest.
David McRedmond
commercial director, Eircom

The carrot has not worked. Let’s do what the Danish regulator did. In his country there was, like in Ireland, no cable competition.
The regulator ordered (via the Universal Service Obligation on the incumbent) all lines to be capable of carrying ISDN quality – thus making 100% broadband a reality (as virtually all ISDN quality lines can also carry dsl).
And the regulator emulated competition by setting the lowest EU unbundling price, giving competitors access to the national copper telephone network. This forced the lazy incumbent to reform and invest, just as cable competition would have done. The rest is history. Denmark is the now the EU broadband leader.

Our Irish regulator takes his wisdom from the flat-earth society: According to John Doherty of Comreg he aims to “encourage” our turbo-capitalistic incumbent to invest, by regulating for “adequate” profits for the incumbent; the opposite what competition would do. The effects are all too visible: Ireland has become the Broadband and Internet laggard of Europe. The first bunch of Eircom owners has already left with half a billion worth of carrot. We all are left with a terrible mess of a degrading network and an extreme digital divide.

While we can and should deplore Eircom’s strategy and skilled PR spin, we should never forget in whose hands the ball really is: in the hands of the Minister for Communications and his Regulator Comreg.


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