25% price hike in store for Eircom customers

dahamsta

25% price hike in store for Eircom customers

20/07/03 00:00

By Michael Murray
Eircom customers face a potential 25 per cent hike in line rental charges. Large price increases are in prospect if the company wins a legal battle with telecoms regulator Com-Reg, telecom industry sources warn.

Eircom - which last week announced the payment of a dividend of €466 million to its shareholders - has assembled a high-price legal team to fight the regulator.

Eircom's lawyers, led by former attorney general and chairman-elect of AIB, Dermot Gleeson SC, are challenging the basis of the recent ComReg ruling that Eircom should apply a monthly rental of €14.67 per line to competitors accessing the "last mile" of its network.

In its original negotiations with the regulator, Eircom argued for a charge of €27 as the rental, based on their current cost structure. But ComReg argued that the charge should be based not on Eircom's current costs, but on the costs that would be incurred if Eircom was operating in line with standards of efficiency common in other countries.

The Sunday Business Post has learned that, in the course of negotiations with ComReg, Eircom was willing to drop its wholesale charge to €20 per month. Once a retail charge margin of 10-15 per cent is added, this would imply a cost of €22 to €23 per month for ordinary household users of the lines. This represents an increase of approximately 25 per cent on the current charge.

When ComReg ordered wholesale line costs to be reduced to €14.67, Eircom challenged the decision by way of judicial review in the High Court.

According to Eircom sources, the "process" used to arrive at the figure is at the heart of its legal challenge. But it is clear that if Eircom wins its case, it will be able to hike telecom charges further.

Such a huge increase is likely to provoke consumer outrageasEircom'sowners have got back more than half of their equity investment 18 months after acquiring the business. Line rental charges have already increased by 15 per cent since last February.

A new hike would give Eircom sufficient additional cashflow to get the remainder of its equity back within another 18 months.

spongebob

only 25% ?

They will charge the full €27 ex vat if they win the case...and that to another operator. add 21% VAT and you have €32.67 . Allow a €2.50 margin for ESAT , incl VAT and you have €35

Therefore you will see a line rental increase of over 50% from €23 to €35 because the High Court will either allow Eircom to do what it wants ......charge €27 wholesale (over 100% greater than the EU average) or else it will back Comreg to the hilt. Some suspect the former.

The government pays approx 15%-20% of all line rental already through the Old Persons line rental scheme. Everybody in Ireland will pay a sizeable chunk of this and other previous increases through their PRSI

We already have to pay the highest line in the EU, by far. The current €23 a month (retail inc VAT) is over 50% greater than the EU average , Eircom now want to take that off the scale altogether . Thats means good business for the lawyers and great business for Eircom. It also makes Tony O'Reilly into the greatest Irish Businessman of all time .... I am not worthy so I'm not.

M

BadCharlie

Ever since we have got the euro this country has gone mad on putting up the price on everything. If things keep going as they have been, the rich will stay and the poor will just have to leave . Who's on for going over to the uk i hear things are better over there

PiE

Don't blame the Euro Charlie, it's only being used as a tool to rape the Irish telecoms consumer.

If Eircom win this... (how likely is that anyway?), the Government will have to step in and act, surely? Especially if it's pointed out to them that Eircom price increases will cost them money (through the old persons scheme).

To mis-quote Bill Hicks:

"They must carry their balls in a wheelbarrow man."

MDR

Ever since we have got the euro this country has gone mad on putting up the price on everything.

And they didn't go mad putting up prices before ? We have been ripped off for years, more to do with the Irish business attidute than the Euro.

I am rattling my rosary beads in the hope that COMREG wins this fight, ducking hell how much money do they want to squeeze out of us, how insane do they want to make their prices. COMREG have to win this or we are all screwed, as to lose will prove COMREG to be powerless .....

Sleipnir

the more people that change over to Esat or another telco for their landline, the better. They stick it to us, we stick it to them.
Eircom don't deserve their customers and if people could only see how easy it is to change, and how much cheaper it is, they'd jump at it.

nahdoic

COMREG have to win this or we are all screwed, as to lose will prove COMREG to be powerless .....

Either way, the public at large are really starting to see eircom's true colours shining through. And no eircom, you can't mass media advertise your way out of that. If COMREG lose this, then the government will be forced to change COMREG, so its rulings can't be challenged, not by eircom, not by anyone. Once it makes its decision its made.

Just one of these days I hope someone finds a clause that invalidates the whole eircom takeover, and it has to be returned to the government. Now they've learned their lessons, they'd privatise it right this time.

BadCharlie

Well there is about 5 or so more countrys that are joining the euro next year. I'll bet my life on it that the prices in them countrys will also sore sky high.

Any way lots of companys in ireland are foreign " All irish insurance company for example" So why not scr*w ireland!!!

Sorry if u dont agree with me but im just mad with what i c. We dont earn enough and are paying far 2 much for our services. And like what house does not have a telephone so why not put up the price.

MDR

Well there is about 5 or so more countrys that are joining the euro next year. I'll bet my life on it that the prices in them countrys will also sore sky high.

nah ... don't believe everything you read in the sun ....
inflation will probabily go up a little more than usually in those countries that year, depending how mature and informed their consumers.

Sorry if u dont agree with me but im just mad with what i c. We dont earn enough and are paying far 2 much for our services.

We earn plenty, we are just being screwed by indirect taxation and cartels, it duck all to do with Euro, and everything to do with who you voted for, and you attidutes to consumerism and taxation.

Paddy20

Eircom are simply swimming against the tide of change. The last gasp of a dying Monopoly that still has not realised that public opinion [The most poweful force in this Country] is turning firmly against the Rat and its obnoxious droppings.

A 25% price hike on Eircom line rentals! Get real, they have not got a hope. They are dead in the water, yet they are still squandering the average Irish citizens money with gay abandonment.

However, rest assured that their self inflicted day ofreckoning is nigh!.

Paddy20.

mike65

Paddy, you could stand in for any old testament prophet on thier days off!

As for the hike, if it happens we will have to organise a campaign of non-payment or maybe write a huffy letter to the Irish Times!

Mike.

ps dont forget we've had 14% rise so far this year already :mad:

bizmark

As for the hike, if it happens we will have to organise a campaign of non-payment

Na that will just get us all booted off of esat or utv

Anyhow,s if this does pass and eircon gets their price rise it could well prove good (if it doesnt break us) as more and more will look at the bill and say WTF!

SkepticOne

The journo is getting confused between line rental and LLU charge per line.

If Eircom wins this court case, then only those customers getting ADSL from Esat (note: not RADSL) will be directly affected. Afaik, Esat are the only operator doing LLU.

Currently, Esat pays 16 euros per line. ComReg want to reduce this to 14 euros but Eircom want to bring it up to 27 euros. Currently there are only about 2000 lines under LLU and many of these are under the line sharing rules where a smaller figure is paid.

Eircom, quite rightly, are scared stiff of LLU. What if other operators come in and supply services. They will then lose their monopoly. This is probably why they delayed handing over a CD of all the lines that passed the line test.