| Direct Links
• Home |
Your Agenda Interview
Dermot,
would you've time for an evening meeting in Athlone next Thursday? Mary thinks we could have an enjoyable evening together. She surely has valuable experience and advice on how to come away with the Irish media despite being absolutely ineffective.
I'll enclose her letter
Dear John,Did you watch Dermot's interview on TV3 last Sunday; it's a program called Agenda? I start to like Dermot; his argumentation is becoming more and more like my own.
While young David McWilliams had the cheek to laugh at Dermot's arguments, he could not deter him: Ireland's telephone system is a superb one, we are the first European country to get digital telephone technique (now even I would not have dared to propose this 15 year old hat), and best of all re-inventing my old argument of Ireland just being so disadvantaged because of its small size and of course the eternal "there is no demand for broadband in Ireland".
Oh, it felt just like the good old times…
It would be fun reviving more old red herrings together. Could you invite Dermot to our weekly card game evenings? What do you think?
See you then next Thursday, perhaps already with Dermot?
Yours
Mary
P.S.
The photo you took of me on my new digital camera last week came out nice. My nephew put it on this letter on the computer! Isn’t it wonderful what the young ones can do with the Internet and IT and all of that?
I've recorded the agenda program and enclosed the tape.
resources:
Transcript of the agenda interview:
David McWilliams: Hello and welcome to Agenda
On the program today:
We look at arguably Ireland's most important industry, telecoms. Why are Irish fixed lines and mobile bills so expensive? And why did the minister, and not the regulator, move against Eircom this week. We speak to minister for communications, Dermot Ahern…
On Wednesday the minister for communications Dermot Ahern was forced to intervene to prevent Eircom from increasing, yet again, the price of fixed line rental… This follows steps by telecommunications regulator ComReg to ordering mobile operators Vodafone and O2 to open up their networks to competitors. So do such actions, so late in the day, mean that deregulation has failed to deliver for the consumer? And instead of having real competition, do we simply have two or maybe three controlling the market at the expense of their customers? Minister, privatisation has been a disaster for Irish consumers.
Minister: Well, the whole issue of deregulation has been driven at EU level, and while it might fit some of the bigger countries right across the number of services like telecoms and energy etc., in a small country like this it's very difficult to drive an open market; opening up the markets, because you have fairly substantial dominant players like Eircom, Telecom Eirean as it was, in Ireland, and indeed the ESB in the energy sector, and…
David McWilliams: So you're saying it's a matter of size, that maybe in hindsight deregulation was....
Minister: Well, having, sort of, quantity of scale will help - always will help - and will make it easier because there's more opportunities to get into bigger markets, for instance in England, or in Italy, where there's sixty million people, they can drive competition much quicker. It's more difficult in a small country like Ireland where…
David McWilliams: Minister, people watching will say, "hold on a second, I was told competition would lead to lower prices," that has not been the case. We've had four increases in fixed line rental. "Privatisation would lead to lower mobile phone prices", that has not been the case. Average revenue per user is five hundred and eighty three euros, on average. This is the highest in Europe. So people watching will say, "OK, could be scale, but is also it probably not the right thing to do"..
Minister: I'm not able to make Eircom's case, but Eircom will tell you, that there is competition now, that a number of years ago they had 100% of the market, now they only have about 40% of the market, because we have the revolution in mobile phones, so there's much more competition. And even the moves made in relation to fixed line rental in recent times, could very well lead to even greater migration, from fixed lines, phones in the home, to mobile phones. Which has happened, particularly with the younger generation. Look, in relation to what Eircom have done in recent times, there is an independent regulator, who's supposed to regulate prices, they have set, some time back, about a year and a half back, that, overall telecom prices can not rise above the rate of inflation.
And they've succeeded in that because none of the increases in recent times have been ahead of the rate of inflation, and again, Eircom will show, very clearly, and they showed this to me last week, and also to the Oireachtas committee, let me finish, to the Oireachtas committee, they showed telecom prices in comparison with other, like energy, with gas and other services that people get, have not gone up in the same, same dramatic way as they have in those. Now… In relation to line rental, line rental is one of a basket of services, in telecom services, which has gone up, but the actual call charges have actually come down. So their point is, and ComReg's point is, that the overall bill has not gone up.
David McWilliams: Can I.. you've made the point to me, which is what people regard as the rip-off is less bad in telecoms than it is in other utilities, which is not a very good…
Minister: I can answer in relation to the other utilities; in ESB, I have responsibility for energy, the country is spending four billion between now and 2007, in renewing and maintaining our infra-structure. We don't want blackouts like we had in the US or in Italy. Secondly, in relation to the gas infra-structure, we've spent 350 million in bringing gas from Dublin over to Galway, and from an inter-connector from Scotland to Gormanstown, so people, I mean… prices have to go up to pay for those things, those things can't be built without, without somebody…
David McWilliams: Let's go back… to telecoms, you mentioned there, the regulator, ComReg; Now, ComReg, bizarrely enough, seems to get its money based on a percentage of the turnover in their industry. So their targets, are not price targets to bring down prices, their target is to increase the turnover in the industry. This seems very strange.
Minister: Well as a result of recent changes in the EU legislation, which we transposed back in July, the charges, ComReg can make, in order to allow it to operate, are much reduced. The charges on telecom companies are much reduced.
David McWilliams: What do they do, Minister?...
Minister: They're an independent regulator, there is one in every state in Europe. They decide, totally independently of the political system and… to make sure that companies in an open market, get the rate of return, so that they can invest, re-invest in the infrastructure. I go back to the…
David McWilliams: but you just said… you just said… Can we focus on telecoms?
Minister: Prices were kept down in both of those, over the years, and what do we get? Lack of investment in the infra-structure. If we had not invested in telecoms over the last number of years, by private companies and even before privatisation, we wouldn't have the excellent telephone system that we have here....
David McWilliams: But we don't have an excellent telephone system… we do not…
Minister: We were one of the first in Europe to have total digital telecommunications, in this country…
David McWilliams: digital telecommunications is last years technology…
Minister: …this was a number of years ago… and we have invested…
David McWilliams: what I'm saying, is now… we do not have broadband. You and I know that, the viewers know that, we have not invested, private companies have not invested, Eircom has not invested in broadband. Eircom has used it's monopoly in the fixed line business to increase, what's called "sweating the assets", for it's investors. We'll come back to that in a second, and the consumer has lost out. We do not have a state of the art telecoms system…
Minister: We do, we do - except in the area of broadband. No, again, the demand, isn't… is to a certain extent… not there. Because the… while some people might demand broadband, and a number of people who require it, generally speaking the demand in Ireland for broadband is not what it is in other countries. Eircom have enabled nine hundred thousand users, they have enabled the phones, but the demand has not come…
David McWilliams: but… but minister, how...
Minister: has not come before recent months, mainly because of exertions from people like me…
David McWilliams: It's too important, infrastructure is too important to be demand-led. That's the crucial difference between infrastructure and everything else; it has to be supply-led, for example there was no demand for mobile phone's back in 1991, the demand was led by the supply of phones in the market… people said, "oh yeah, I use these".. Things were supply-led. And here we have the problem that Eircom has not delivered on broadband, not because of the demand, but because they were sweating the assets,
Minister: nonono...
David McWilliams: squeezing the money…
Minister: nonono... It's a classic case of a private company, who come late into these new areas, the exact same thing happened in Japan and Korea… I visited them, specifically a number of months ago to see how they're so ahead of the rest of the world, not just Europe… the rest of the world! Europe, generally, we're not that badly off, in European terms, but in comparison to Japan and Korea… there was a leap of faith, by the two main private companies in both of those countries, which, now… companies like Eircom, and others across Europe, have to make, and that is to decide whether they're going to continue voice telecommunications or whether they're going to go into data services, and what has happened, particularly in some of the northern European countries, is that they've gone in to data services, and Eircom, now, belatedly I have to say, have accepted that the future is data services and broadband…
David McWilliams: But… people are listening… people are watching… you talked about the independent regulator, you say it's independent, and yet, you forced them to act this week. That's not independence.
Minister: I..
David McWilliams: When they've got to do something, you phone them up and say "lads, put your act together"
Minister: I have power under the legislation, which is passed by the Oireachtas, to give policy directions. There was an understanding, an agreement made between Eircom and between the operators and ComReg. ComReg were driving what's called "wholesale line rental", which in effect is the ability of other companies, not Eircom, to have a single bill, in other words, if somebody migrates from Eircom to them, at the present time, they'll still get a bill from Eircom, with all the bumf in the post they get from Eircom. So the line rental, sorry, let me finish, and they also get, they get a bill, the person gets a bill from that new company, that company, or those companies, are saying, they want a single billing, they want to get into the system, where there's complete transparency between moving from Eircom and going to them. That has been delayed, why? Because there has been a dispute between Eircom and the operators, and ComReg in the middle. ComReg will say that there's fault on Eircom's side, but also fault on the other operators... Now, the reason I intervened was because I said, "OK, if this is not in due time, within a very short space of time, I will then, insist, by policy direction which I'm entitled to under legislation, that comreg bring in a price cap; a sub-price cap, so that the line rental cannot go higher than the rate of inflation. And I'm entitled to do that…
David McWilliams: Can I ask you…
Minister: Sorry, just let me finish… I think that is what's required… I have to be conscious…
David McWilliams: May I...
Minister: …have to be conscious of the requirement that we have to give Eircom the ability to invest in that infra-structure, because the other companies are not investing.
David McWilliams: Minister, very very finally, the timing; has the timing of this move got anything to do with the re-flotation or Eircom, which is lastly slated for this time of the year, because I'm looking at that; Tony O'Reilly is going to make a lot of money on this re-floatation. Has the timing of the cap on Eircom anything to do with Independent Newspaper's treatment recently of the government, which has been very very harsh…
Minister: That doesn't enter into it in the slightest; I have a job to do… what anyone does, and whether it's Tony O'Reilly or the CWU who are involved in Eircom, what they do or say does not affect me in my decisions. I have to look at it from the benefit of the Irish consumer… and within the power that I have, I will do whatever I can to ensure that people have choice.
David McWilliams: Minister Dermot Ahern, thank you very much indeed.
< Back Home
