[Article] Fintan O'Toole's Column

Mr_Man

Fintan's column in to-day's Irish Times is an excellent piece making many of the points that IOFFL have been raising about the state of BB in Ireland. Peter is quoted regarding the number of lines needed to meet Ahern's reduced target of mid-table mediocracy, and IOFFL is quoted on the poor state of the network in Ireland.

Fintan also highlight's the lame role played by Comreg in fostering a competitive market for telecoms services in Ireland.

A must read for all interested in the state of BB in Ireland

M.

vinnyfitz

Broadband needs a heavy hand




For those who are being driven demented in their quest for a broadband connection, I have a simple solution. All you have to do is write a column for a national newspaper, writes Fintan O'Toole

A month ago, I wrote about the issue here, challenging from my own experience the consistently upbeat messages from Eircom and the Department of Communications. By 10 a.m. on the morning my column appeared, Eircom were on the phone and by 1 p.m. my broadband connection was up and running. It's a fantastic service, and a bit of publicity is all you need to get access to it. A few words here and all the technical problems disappear. All the months of screaming into a void, all the torment of unreturned phone calls, broken appointments and hollow cackling at the ads urging you to get broadband will be over. It's well worth the admittedly large fee I shall be charging to rent out this space.

We now have a new Minister for Communications in Noel Dempsey and an opportunity to revisit one of the Government's great public policy disasters. It has been recognised since the late 1990s that broadband access is a vital national interest for a State that claims to be in the forefront of the technological revolution. In its Statement of Strategy 2003-2005, the Department set itself as a "performance indicator" the aim to "have a fully competitive communications sector in place by the year 2005 which is on a competitive par with the key comparator OECD economies in terms of network penetration, investment, price, choice and quality, across all platforms".

The Government's stated goal is that Ireland's broadband connectivity be "among the top decile [i.e. the top 10 per cent] of OECD countries by 2005" and to "be the first European country to have widespread 5 Mbps Internet available". With the privatisation of Eircom, this has turned out to be pious nonsense and, for all the bluster from the outgoing minister, Dermot Ahern, over the last few months, he tacitly accepted that this is so.

Last March, in a policy directive to ComReg, he quietly downgraded the goal from being the best in Europe and among the top 10 per cent in the world to merely "be at or better than the EU-15 average for end-user access to and usage of broadband by mid-2005". It is now patently obvious not merely that the Government has abandoned its own "performance indicator" but that even this new goal of mid-table mediocrity will not be attained. Both the Government and Eircom have trumpeted their claim that 100,000 customers will be connected to broadband by the end of this year. The analyst Peter Weigl has estimated that even to meet the goal of mediocrity, the figure would have to be around 320,000 by next June.

The reason for this catastrophic failure is obvious enough to anyone not blinded by free-market ideology. The theory was that by flogging off Eircom and opening up the market, competitive forces would be unleashed which would result in profit-driven firms cutting each other's throats to service the customer. The problem with applying this faith-based approach to basic social and economic infrastructure, however, is that the infrastructure requires the kind of long-term investment that doesn't make sense to a private company like Eircom whose goals are to pay back the money its investors borrowed to buy it, to pay huge fees to its directors, and to generate immediate profits for its shareholders.

In his last days in office, Dermot Ahern muttered, in the midst of another upbeat speech about the wonders of broadband, the blatantly obvious truth that "there is no doubt the rollout of broadband to the regions has been hampered by a lack of investment in the necessary infrastructure by the private sector".

Except this isn't just a regional problem. The real issue is that so many of our phone lines are rubbish. The lobby group Ireland Offline and the Internet technology magazine siliconrepublic.com claim that less than half the 1.7 million lines in the Republic are capable of carrying a digital subscriber line (DSL) which is needed for broadband. While the official claim is that 70 per cent of the country is now broadband-enabled, the reality is that huge numbers of people in areas where broadband is technically available can't get it because their phone lines are not good enough. In the 1980s and early 1990s, when these lines were installed, they were often split, a practice that made sense at the time but that now leaves us trying to run a Formula One car on a bumpy boreen.

These lines need to be fixed, but Eircom, as a private company, has no incentive to do so. It needs to be forced to make the long-term investment. And this is where Noel Dempsey comes in. The stupidity of Government policy has been that, even when Eircom was flogged off, the other side of competition theory was not put in place. At the very least, private suppliers of essential services need to be heavily regulated to make sure they serve the public interest. Instead, ComReg was explicitly established with instructions that "the regulatory burden on the sector be minimised" and that its operations should be "light-handed".

Given the spectacular failure of this approach, might not a touch of heavy-handedness be in order?



© The Irish Times

MarVeL

Bang on the mark with the article although he did miss out the other way of getting action from eircom. Simply become communication minister and point out that you can't get it. So far its worked every time

MarVeL

Bang on the mark with the article although he did miss out the other way of getting action from eircom. Simply become communication minister and point out that you can't get it. So far its worked every time

simonm2

I don't think anybody in the Irish Government has a bull's notion about the importance of Broadband. To say we are being left behind is an understatement of monumental proportions. The BBC published this today: http://news.bbc.co.uk/2/hi/technology/3699820.stm which, among other points, notes that China added 6.5 million dsl lines in one year most of which most are 4mbit vs our paltry 512kbit lines. Arguing that there are structural reasons that make it easier in China is a waste of time - the only argument that counts is that there are 1.2 billion Chinese who will soon be enabled to do your job in their own homes while we can scarcely make a reliable phone call. I can't say I have loads of Chinese friends - I don't. But the few I know are clever, super technical people with top class educations who speak who knows how many eastern languages plus at least two western ones. I wish them all success and enjoy working with them.

Rather than looking to match lame mediocrity Europe as a whole has only one choice - get ahead in the comms stakes. I fear it's probably too late for Ireland.

The Minister for Comms (or whatever its call at the mo) needs to look at one item in the Celtic Tiger's bottom line. If we remove HP, Dell and MS from the figures how do we shape up? If we remove only one item from the bottom line - MS software, where do we shape up? If we look at ms software which adds quite a lot to our bottom line, how difficult would it be for MS to move it somewhere else? I'd estimate it wouln't take more than 2 weeks to move it lock stock and barrel - in essence all that happens is boxes arrive at $1 a box, get a hologram stuck on them and leave at $100 a box. So much for highly skilled, high value work. The whole computer industry is vulnerable. Having a lame duck comms system sure won't help.

Now admittedly the companies I mentioned don't depend on the same service as we plebs do. They have their own networks. But if enough of their employees (the ones that count) start saying how much this place sucks then sooner or later it will influence investment decisions. At a certain point they won't be able to attract staff because they won't be able to promise basic infrastructure and certainly not at affordable prices.

Wake up Bertie.....

spongebob

simonm2 wrote:

I don't think anybody in the Irish Government has a bull's notion about the importance of Broadband. To say we are being left behind is an understatement of monumental proportions. The BBC published this today: http://news.bbc.co.uk/2/hi/technology/3699820.stm which, among other points, notes that China added 6.5 million dsl lines in one year most of which most are 4mbit vs our paltry 512kbit lines.

That may have something to do with the ability of the Chinese to install a telephone line. We would know feck all about that in this country.

But if enough of their employees (the ones that count) start saying how much this place sucks then sooner or later it will influence investment decisions. At a certain point they won't be able to attract staff because they won't be able to promise basic infrastructure and certainly not at affordable prices.

Excellent summary Simon ! I'm sure they do when they spend hours in traffic jams and arrive home to a split line...unless thay are Fintan O Toole.

Industry analyst David Greggains said it was "amazing growth," but was still only 6% of China's total phone lines.

Lets see.

We now have about 3 or 4 % of our lines DSL enabled while China has 6%

We have a Total DSL Install base of about 75,000 it has taken 6 years since the DSL trials in Dublin in 1998 to get that far. China adds some130,000 a Week .

Which one is the Third World Country ?

M

simonm2

Which one is the Third World Country ?

M

Was just reading another thread here about broadband for schools where one of the people points out that Satellite is the only option in most instances or as they put it "a third world solution for a first world country."


Reminds me about what a Kerryman businessman I knew used to say "Ireland part of the 2 and 1/2 world" - i.e. not quite third world but sure as hell not 1st world either.

Ripwave

Muck wrote:

Which one is the Third World Country ?

Just being picky, but China isn't technically a Third World country!

(The phrase was originally used to describe those under developed nations that weren't part of either the Western "first world", or of the Communist Bloc).

LoBo

Have to say, excellent article! Well done Fintan + those who fed him the pertinent info (eircomtribunal/IOFFL I presume?)

Tom Dunne

For those who are being driven demented in their quest for a broadband connection, I have a simple solution. All you have to do is write a column for a national newspaper, writes Fintan O'Toole

MarVeL wrote:

Bang on the mark with the article although he did miss out the other way of getting action from eircom. Simply become communication minister and point out that you can't get it. So far its worked every time

Picture it now - the application form for broadband:

"Eircom is committed to providing you with a world class broadband service and being a dynamic and forward looking company, present to you two very simple methods of applying for broadband:

1: In 2,500 words or less, tell us why you need broadband. Have it published in a national newspaper and sit back and wait for our call.

2: Alternatively, you can run for government, ensuring you land the post of communications minister. Mention in at least two public statements that you cannot get broadband and we will take care of the rest.

No forms, no bank details, no hassle.

Eircom - where the customer with a public voice comes first"

capistrano

I agree with almost all of Fintan O'Toole's article. However, he just can't help himself giving his customary kick to private enterprise:

The reason for this catastrophic failure is obvious enough to anyone not blinded by free-market ideology. The theory was that by flogging off Eircom and opening up the market, competitive forces would be unleashed which would result in profit-driven firms cutting each other's throats to service the customer. The problem with applying this faith-based approach to basic social and economic infrastructure, however, is that the infrastructure requires the kind of long-term investment that doesn't make sense to a private company like Eircom whose goals are to pay back the money its investors borrowed to buy it, to pay huge fees to its directors, and to generate immediate profits for its shareholders.

Fintan should note that the countries with the best boradband figures are provided for by private enterprise: Japan, South Korea, USA, UK, Germany, etc.

So, Fintan should be a bit more objective in his articles and not always take such a "faith-based approach" himself.

bealtine

[QUOTE=capistran
However, he just can't help himself giving his customary kick to private enterprise:

Fintan should note that the countries with the best boradband figures are provided for by private enterprise: Japan, South Korea, USA, UK, Germany, etc.

[/QUOTE]

Agreed, with the kick to private enterprise, but then he clearly did say:

"The reason for this catastrophic failure is obvious enough to anyone not blinded by free-market ideology. The theory was that by flogging off Eircom and opening up the market, competitive forces would be unleashed
and
"The stupidity of Government policy has been that, even when Eircom was flogged off, the other side of competition theory was not put in place. "

This last piece is the essential "kicker" we now have a private monopoly instead of a public monopoly and contrary to what some would like us to believe very little, if any, competition to drive forward the holy grail
of "competitive forces"

Blaster99

I would dearly love to understand why it is not in Eircom's interest to fix phone lines and provide a service to as many people as possible. I don't understand what the point is in rolling out a broadband network and then ensuring that few people can actually avail of it. This I would have thought would have been the mindset of a public company that couldn't care less, but logic would normally dictate that a private company would try to maximise the return on investment.

simonm2

Blaster99 wrote:

... logic would normally dictate that a private company would try to maximise the return on investment....

That's maybe why Moody's and Standard and Poor rate some of Eircom's financial stuff at 3 levels below investment grade - one step above junk bond. They are actually up to their eyeballs in financial doo-doo but a lot of people seem to want to ignore that.

Jorinn

capistrano wrote:

I agree with almost all of Fintan O'Toole's article. However, he just can't help himself giving his customary kick to private enterprise:

Fintan should note that the countries with the best boradband figures are provided for by private enterprise: Japan, South Korea, USA, UK, Germany, etc.

So, Fintan should be a bit more objective in his articles and not always take such a "faith-based approach" himself.

So eircom are just an exception, everyone else can do it then but eircom are incapable because, um, what?

dahamsta

Blaster99 wrote:

I would dearly love to understand why it is not in Eircom's interest to fix phone lines and provide a service to as many people as possible. I don't understand what the point is in rolling out a broadband network and then ensuring that few people can actually avail of it. This I would have thought would have been the mindset of a public company that couldn't care less, but logic would normally dictate that a private company would try to maximise the return on investment.

This wasn't about a company though Blaster99, it was about people, greedy investors that went into Eircom with every intention of treating it like a short term investment, a gimme. That was never going to happen, and when they realised this they raped the company for as much as they could /while/ they still could. Now the company is left with massive loan repayments, and they simple /can't/ invest what they should into the network. The only cure is a massive capital injection by long-term investors, but there aren't a whole lot of them around these days. In fact there's only one really viable investor, Gov.ie, and they won't do it because it will be an admission of failure. And Gov.ie doesn't have the guts for that.

[To be clear, I'm not for a second suggesting that Gov.ie should invest in Eircom - god forbid - I'm suggesting that they should buy the network. Obviously Eircom would try to overvalue it, so it would be up to Gov.ie to bring Europe to the bargaining table, either with incentives or a very large stick.]

adam

Ripwave

Blaster99 wrote:

logic would normally dictate that a private company would try to maximise the return on investment.

eircom are making sure that as many people as possible can get broadband at the lowest possible cost to eircom. If the cost of "fixing" Joe Bloggs line is greater than €0, then it's cheaper to just skip Joe Bloggs, and sell it to his neighbour.

That's what "maximising the return on investment" means.

Blaster99

Funny how that's not the case in the rest of the world.

seamus

Blaster99 wrote:

Funny how that's not the case in the rest of the world.

When the takeover occured, they ideally would have preferred to have stopped broadband rollout, and continued to reap money from line rental and dial-up internet access.

Dial-up is much much more profitable than DSL. Much much much much more.
Had Ireland Offline, ComReg (and to a lesser extent the ODTR), and many other magazines, and outspoken people, not existed over the last four years, we would still be running dial-up access over poor quality lines, no DSL, no LLU (or even hint thereof), no FRIACO, and probably an even higher line rental.
I'd put a very large wager on it. The current consortium's ethos is: Minimum investment, Maximum profits.

The reason it's not the case in a lot of other places is one word: Competition. BT UK fix people's lines to get them DSL because if they don't someone else will. Eircom have no such fear. That, and a regulator with balls. I propose we give Ofcom control over Irish Telecommunications.

Blaster99

But the fact is that Eircom has invested in an ADSL rollout and continue to do so, but don't do much anything to ensure that they can sell it. I haven't seen an explanation as to why this makes sense. It must hurt them pretty badly when they install ADSL in an exchange and find that 30% of potential customers can't get the service, primarily because their own test methods are cack.

I also think selling 512kpbs 48 times over for €45 sounds like pretty good money, or they wouldn't be doing it. That's like a couple of grand for an uncontended pipe that probably costs them €200 tops. I'm sure I'm ignoring lots of costs, but it's gotta turn into at least 100% margin.

simonm2

Blaster99 wrote:

.... but don't do much anything to ensure that they can sell it. I haven't seen an explanation as to why this makes sense. .......

Eircom are so used to being the only game in town that they don't know what selling means. They are used to queues begging for a phone line.

Eircom put broadband into Loughrea at the end of June - I found out by accident. I was on their waiting list or interest list or whatever. I signed up for EsatBt within two weeks of the exchange being enabled. Eircom has never once phoned me, mailed me, put an ad in the Galway advertiser, sent someone door to door, announced it even as a press release to the local radio let alone advertised it.

Maybe the point about dial up being more profitable is right. Why tell your heavy internet users that they can get a better service for less if you can a) keep screwing them and b) tell the politicians that you have half the country covered. Best of both worlds? There is a posting on one of the broadband forums here where a guy near the centre of Dublin (Fairview?) couldn't get dsl. Line kept failing. Long saga - in the end he called up Eircom and told them they could remove his landline completely if he couldn't get broadband - they rang him back in two hours and said the line was now ok. Guess what - he was a heavy dial up user.

Ripwave

Blaster99 wrote:

It must hurt them pretty badly when they install ADSL in an exchange and find that 30% of potential customers can't get the service, primarily because their own test methods are cack.

I've never heard anyone suggest that eircom are leaving ADSL connections lying idle because of a lack of customers. So why would they bother spending money "fixing" lines that can't currently avail of the service? Especially if the people who currently have those lines are already spending €20-€30/month on dialup?

If you can get it at zero cost to eircom, then it's in their interests to give it to you. If you can't get it because of an overyly strict test, then it will be in their interest to loosen up the test if and when the supply exceeds the demand - right now that doesn't appear to be the case yet.

Blaster99

It must be because of this demand that they felt the need to introduce free trials.

Moriarty

The free trials were the only concievable way to get a decent kickstart to dsl subscriptions here. It's not like free trials are unique to eircom anyway, most countrys have them from time to time.

Blaster99

My point, which I thought was obvious enough, was that if Eircom could sell ADSL so easily they wouldn't have bothered with a free trial. This is incidently not a zero cost sale either, so Eircom quite clearly engages in loss leaders to drum up business. I also think this pretty much invalidates the argument that Eircom doesn't want broadband because it hurts revenue. Every telco in the world is rolling out ADSL because it makes them money.

Anyways, they've decided not to fix lines so that's that. In the meantime the competition will roll out services and one day Eircom will be no more.

capistrano

Blaster99 wrote:

My point, which I thought was obvious enough, was that if Eircom could sell ADSL so easily they wouldn't have bothered with a free trial.

They have to offer the free trial now becasue of competition from EsatBT, UTV and the rest. Remember when they were charging 100/month and then 55/month with installation charges as well.
We are really talking about a period in the early part of the decade, when the rest of the developed world was getting ADSL, eircom offerred their customers nothing except high price diallup. They stuck with that for as long as they possibly could and finally when the pressure from consumers, government and lobby groups became too much they started rolling out ADSL.
I guess they always knew that they would have to rollout ADSL at some point, they just wanted to put it off. They had no strategic vision - all they saw were the initial costs involved in upgrading their network not the future revenue stream. This is typical of badly run companies in an uncompetitive environment.

dahamsta

While we're on the subject of trials, could someone have a look at this please and tell me if I'm wrong?

adam

seamus

dahamsta wrote:

While we're on the subject of trials, could someone have a look at this please and tell me if I'm wrong?

adam

UTV certainly won't allow a trial on a line that's previously had broadband. IOL are notorious for not publishing their T's & C's online, so no idea there.

eircom's specifically state:
Telephone lines which previously availed of summer surf promotions are not eligible for the 2 month FREE trial promotion.
Which is interesting. Presumably they're referring to the trials that all operators were allowing. But does this particular one refer to eircom's offer, or the wholesale agreement?

What we need is a copy of the wholesale interconnect agreement. Muck?

It doesn't make sense for UTV (and possibly IOL) to not allow migration to a free offer after another free offer if eircom are doing it.

dahamsta

The Ts&Cs for the "summer special" specifically say that the offer is limited to one per CLI seamus, and that applies to all bitstream customers. I only noticed this myself a couple of weeks ago, because a client on ISDN is trying to upgrade to DSL and it's proving tricky (I'll come back to that). As far as I can see there's one of two things happening here:

a) Eircom Net is availing of the "summer special" offer and restricting it to two months for some reason. In which case Eircom Net is breaking Eircom Wholesale's Ts&Cs.

b) Eircom Net's offer isn't availing of the "summer special", which would negate the one-per-CLI requirement. But surely if this was the case wouldn't they be selling below cost? Unless perhaps this accounts for the shorter offer. It'd be interesting to work up the figures on this.

To come back to the ISDN issue, Eircom has made it extremely difficult for ISDN customers to avail of the special offer, because of course the ISDN line has to be downgraded to PSTN before it can be converted to DSL.

Obviously this is a technical thing, but Comreg should have stepped in here to force Eircom to provide alternative arrangements for ISDN customers. This might seem a little unfair, but we all know that Eircom's big ISDN push in the year or two leading up to DSL rollout was specifically for this purpose (i.e. to keep people on dialup as long as possible).

adam

spongebob

dahamsta wrote:

The Ts&Cs for the "summer special" specifically say that the offer is limited to one per CLI seamus, and that applies to all bitstream customers. I only noticed this myself a couple of weeks ago, because a client on ISDN is trying to upgrade to DSL and it's proving tricky (I'll come back to that). As far as I can see there's one of two things happening here:

a) Eircom Net is availing of the "summer special" offer and restricting it to two months for some reason. In which case Eircom Net is breaking Eircom Wholesale's Ts&Cs.

Said wholesale T and C is here.

http://webdev.eircom.net/eircomwholesale/dynamic/pdf/bitpricev1.7um.pdf

60 connect and 60 cessation = 120
If a connect lasts 3 months you then get a rebate of 120 and a bitstream transfer thrown in for 10 .

Eircom Net have to take a hit on the 120+ 2 months rental if you disconnect after 2 months but Wholesale does not. IOL do 3 months and get the 120 back .

b) Eircom Net's offer isn't availing of the "summer special", which would negate the one-per-CLI requirement. But surely if this was the case wouldn't they be selling below cost? Unless perhaps this accounts for the shorter offer. It'd be interesting to work up the figures on this.

I read it differently Adam . Eircom Wholesale is either

1. Not tracking the CLI after a trial and allowing multiple free trials on one CLI irrespective of operator , see this thread Here too in addition to the one in the BB forum that you were posting to today. That is against the T&C I linked from Eircom Wholesale but Eircom Retail suffers not Wholesale .

OR

2.Wholesale are Doing a special favour for Eircom Retail. That would be naughty . Very naughty .

M

Ripwave

seamus wrote:

eircom's specifically state:
Telephone lines which previously availed of summer surf promotions are not eligible for the 2 month FREE trial promotion.
Which is interesting. Presumably they're referring to the trials that all operators were allowing. But does this particular one refer to eircom's offer, or the wholesale agreement?

What we need is a copy of the wholesale interconnect agreement. Muck?

It doesn't make sense for UTV (and possibly IOL) to not allow migration to a free offer after another free offer if eircom are doing it.

The "one per line" promotion is a wholesale promotion - eircom wholesale will only give one rebate per line.

But the retail arms can do whatever they want - they can use that wholesale promo to offer 3 month free trials, with one extra month free, or to give 2 month free trials with free installation, or they could just keep all the cash and keep charging their customers the same price. They can decide to offer special terms to all customers, or only to new customers, or only to new customers who have never had broadband before - they can do whatever they like, because it's their marketing money they are spending, and eircom wholesale don't care one way or another what retail customers are paying their providers.

The key point is that the wholesale rebate goes to the providers, not to the customers, and it's up to the providers to decide what they think the best way to use that money is.