We screwed up to the amount of 480 million - so what?



Our "management" of the line rental/single billing issue landed a cool 480 million in O'Reilly and Co's pockets, competing operators and the consumer lost out big time.

We recognised the single bill service as a key enabler of competition and a large consumer interest. So in July 2002 we mandated:"eircom is directed to provide …‘single billing for Carrier Pre-select’ product… by the end of January 2003" (ComReg July 2002)

We correctly linked single billing with line rental pricing:"The changes in treatment of line rental need to be matched by the implementation of the wholesale line rental product" (ComReg November 2002)

Then we did not enforce what we had mandated.
Single billing is still (12 months later) not implemented and Eircom will drag it out as long as possible. Each additional week being worth over 10 million to its shareholders.

In today's hearing of the Joint Oireachtas Committee on Communication ALTO's (the 10% club of alternative operators in the telecoms market) Iarla Flynn thought it necessary to make a big fuss about this issue:
"We told ComReg not to relax the Price Cap until single billing had been introduced and was seen to be working. It ignored our requests to the detriment of the Irish consumer. Since the relaxation of the Price Cap, eircom has increased line rental charges 3 times but has failed to introduce the promised wholesale offering. ComReg does not appear able to enforce its own decisions - no action has been taken against eircom."

Most of the other operators are sweating blood, many have collapsed, the consumer is robbed, but hey – don't look at us this way, we are only civil servants. What do you expect from us?

And in the afternoon you really embarrassed us again, Dermot.
Just as you did when you "directed" us publicly to introduce FRIACO based Internet access last year. What's the public to think of us?

I print your Press Release here in full, as – again – the link on your Department's web site is broken.


The Press Release

Dublin, Wednesday, 28th January, 2004
Dermot Ahern TD, Minister for Communications, Marine and Natural Resources, today ordered the Communications Regulator (ComReg) to introduce competition on line rental pricing by the end of March.

The Minister announced that he is to issue a policy direction to ComReg to introduce by Wednesday 31st March, 2004, a wholesale line rental product single billing product - for voice and data services. Minister Ahern said he would insist that the margin between wholesale and retail rates is wide enough to drive competition.

Addressing the Joint Oireachtas Committee on Communications, Marine and Natural Resources, the Minister said the effect of this radical move would be to

Cut line rental prices to Irish consumers by allowing telecoms companies to compete against Eircom for line-rental.
Cut line rental prices by giving telecom companies the potential to undercut the Eircom price, providing Eircom with the incentive to keep prices down.
Build jobs, lower phone prices for Irish consumers, which in turn will lower inflation.
Direct ComReg to insist that the product is accessible, affordable, and available for telecoms operators.
Minister Ahern stated: If the product is not in place by the end of March and if it is not delivering verifiable competition and lower prices by the end of June, I will direct ComReg to take line rental out of the present price CAP, and to set a specific rental cap no greater than the consumer price index.

The Minister will go to consultation on the proposed policy directions within the next week.

The development of the telecoms market is clearly dependant on the input from a number of players both private and public. I am confident that the significant investment by Government and my policy directions will send a clear signal to the market that I intend to ensure that competition develops so that no operator will be in a position to operate non competitive pricing strategies in any market segment. Also, that consumers both business and residential, can go elsewhere if they are not satisfied with the range of services or prices being offered by individual operators.

Referring to the recent increase in line rental, the Minister said the publics anger was understandable. The public are angry because the price increase is well ahead of the general rate of inflation. Secondly, it has been levied on that part of the telephone service where customers have no choice Eircom is the sole operator. At the same time prices are falling in those parts of the market where the company faces competition.

Thirdly, the timing and size of the Eircom line rental price increase comes at a time when the announcement of broader financial developments in the company could reasonably be portrayed as enabling the existing shareholders to cash in their chips at the expense of the customer. This image has not been helped by the fact that shareholders took a dividend of €500 million from the company just last Summer. Of that total, the ESOP, owned by Eircom employees, benefited to the tune of over €150 million.

In these circumstances it is perhaps disappointing that leading figures in the ESOP have chosen to criticise my policies of bringing increased choice to the Irish public, particularly in terms of accelerated roll-out of broadband in the regions.

I believe that the interests of Irish consumers are not served by leaving them at the mercy of private shareholders including those representing employees - whose interests are the corporate bottom line, even if this means higher costs for consumers and slower roll-out of advanced services.

The Minister said he had no role in approving of individual price increases in the telecoms sector. That is the job of the regulator. Under the price cap mechanism, Eircom has discretion in the increase applied to individual items within the basket of services provided that the overall increase is no greater than the rate of inflation.

The Minister said the issuing of a previous policy direction to ComReg in December, 2002, had led to the introduction of flat rate Internet a commodity which now enjoys 50,000 subscribers.

Minister Ahern said initiatives launched by the Government such as the Metropolitan Area Network project - bringing broadband networks to 19 towns by the middle of this year at a cost of €64m - and the €140m scheme to connect over 80 towns with a population of 1,500 or more to broadband networks were underpinning necessary investment in new technology for the future.

ENDS