[Irish Times] Unbundling still all tied up

damien

Unbundling still all tied up by Jamie Smyth

The god awful screech of dial-up modems connecting to the internet in homes around Ireland is finally receding as more and more consumers opt for broadband. About 85,000 businesses and homes have signed up for high-speed internet in the past year. And while significant gaps exist in Eircom's current roll-out of digital subscriber line (DSL) technology, the firm has finally stopped dithering over the merits of supplying broadband to consumers, and is only arguing over the detail of its roll-out plan, writes Jamie Smyth, Technology Reporter

But with Ireland still lagging behind most developed states in broadband uptake there is no room for complacency. And in one crucial area, known in the telecoms industry as local loop unbundling, the Republic barely registers on the European map.

"Unbundling is important because it offers consumers a real alternative to Eircom," says Mr Brian Timmons, financial director of Smart Telecom, which is currently planning to spend tens of millions on the process. "But there is almost no real unbundling in Ireland yet."

Unbundling is a process whereby part of Eircom's telephone network can by rented by a competitor who can then install its own equipment in Eircom's telephone exchanges to supply a range of products from high-speed broadband to video on demand and digital television.

In European countries, particularly France, Finland and Germany, firms are beginning to unbundle to provide consumers with a wide selection of broadband and video services. But in Ireland less than 2,500 telephone lines have been opened to competitors since "unbundling" was mandated by the European Commission back in January 2001.

Mr Timmons blames this on the high cost of the unbundling and the resistance of incumbents.

"Ireland is a small market and the global telecoms industry has been undergoing great change and disruption in recent years. None of the larger operators have been interested in getting into Ireland and the competitors in the market have generally followed a low investment model."

The big players, Esat BT, UTV Internet and Smart Telecom, have decided to concentrate on repackaging Eircom's existing i-stream DSL service rather than try to unbundle Eircom's local access network and offer innovative broadband services. This means that consumers here do not have access to the same innovative product mix that is available in other states. For instance, Eircom so far has only installed one type of DSL based on a technology known as ADSL, asymmetric digital subscriber line.

ADSL offers fast download speeds to users enabling them to draw down music or video files easily from the web. But the technology is unsuitable for sending large files from a computer because of slower upload speeds, making it an unsuitable technology for many people running businesses from their homes.

Eircom has not deployed any of the newer alternative broadband technologies, SDSL, ASDL 2 and ADSL 2+, and it could be another six months before it begins to offer these. It says its immediate priority is to drive penetration with the current standard, ADSL.

In fact, Esat BT is the only operator in Ireland currently offering the newer SDSL (symmetric digital subscriber line) technology over about 2,500 lines that it has managed to unbundle in Ireland.

This technology provides far higher upload speeds to users enabling them to email large documents and videos from their homes and businesses. But an "unbundling bottleneck" has prevented the company from extending its programme.

"We do it for the business market but the economics are just not right for the consumer market," says Mr Bill Murphy, Esat BT chief executive. "It's just too expensive... if you look at the costs it is probably more expensive to rent space in an exchange than it is in the Trump Tower."

Simply to request entry to an Eircom exchange, rival firms have to pay thousands of euro to the incumbent to pay it to undertake a range of site surveys. There is also a shopping list of other fees that rivals must pay before they can offer services to consumers (see above), bringing the total cost on unbundling a single telephone exchange up to €60,000.

Most emphasis on local loop unbundling has so far focused on the monthly rental charges that Eircom charges to rivals to use each line that runs into a home or business. In Ireland the €16.81 current rental fee is the highest charged in all 15 original member states of the European Union.

The Commission for Communications Regulation (ComReg) will shortly mandate a new price of €14.65, which will still be among the highest fees charged in Europe. Rivals argue this is too high and makes unbundling uneconomic while Eircom argues it is too low and does not give it a return on its own investment.

"At a time when there is such a demand for network investment from Eircom, a decision to put pressure on base pricing components seems slightly perverse," says Mr David McRedmond, Eircom's commercial director, who describes unbundling as a "red herring" for the whole industry.

But privately there is no doubting that Eircom are reasonably happy with the new monthly fee, which is index-linked to inflation. It is understood Eircom will not challenge the decision in the courts, a path it took with the previous unbundling charges.

Esat BT's Mr Murphy describes the fees structure as a "blatant red light and stop sign for unbundling" in Ireland.

"The only way we can unbundle is if we win significant business from Government such as its virtual private network or the schools broadband project."

ComReg, which sets the unbundling fees for Eircom, defends its latest decision on pricing and says the charges reflect the cost of building and running an access network in an efficient manner. Ireland's large rural population means costs are higher here than in other European states, it says.

But rival firms privately complain that ComReg has been bullied by Eircom, which forced a delay to unbundling last year when it issued a High Court challenge to the monthly rental price.

Similar claims have been made against regulators and incumbent firms in other European countries where unbundling the local loop has taken much longer than expected to take off. The European Commission, which mandated unbundling as part of the Lisbon agenda to propel Europe into the information age, has had to initiate legal action against several EU States in an attempt to force the pace of unbundling.

"Incumbents are always truculent in situations where rival firms want to come into their markets and use their networks," says Mr Enda Hardiman, head of the consultancy Hardiman Telecommunications. "It has also been difficult over the past few years for rivals to raise funds."

Even in the larger British market, unbundling has developed at a snail's pace. Just 11,000 lines were unbundled in Britain by 2004, prompting the UK regulator Ofcom to undertake a reviewand appoint an adjudicator to oversee unbundling.

Bearing in mind Ireland's similar poor performance, it is likely similar action is needed here.

Paddy20

*Comreg will shortly mandate a new maximum line rental charge of €14.65c, down from the current Eircom €16.85c . That will put an end to the disabled , housebound and old age pensioners who use different telephony and ISP services from receiving the bi-monthly hard copy bill for €0. 94c !. .

Now that is Imho as a direct result of Martin Harrans [DonegalMans] Press release and Jamie Smythe's Irish Times piece of last week, when Jamie got Minister Brennan to promise a review of The Free Telephone line Rental Scheme.

Well done again,Martin, Jamie and the rest of the IrelandOffline Committee and background volunteers including the Moderators.

Moriarty

This is for wholesale LLU line rental that the teclos pay, paddy. It's not the line rental you or I pay for our phone line, that's a different subject.

eircomtribunal

Paddy20 wrote:

*Comreg will shortly mandate a new maximum line rental charge of €14.65c, down from the current Eircom €16.85c.

That's wishful thinking. This is not about the so-called whole sale line rental, where our gov will cave in and just pay out some more taxpayers' millions to Eircom to quieten the OAPs.
This € 14.65 is about the Local Loop Unbundling price and the news are really bad news: By setting the second highest price in Europe, when next door LLU prices get slashed by 70 %, when we urgently need to have the lowest LLU price in the EU, as we have no "natural" cable competition, Comreg does its worst to further condemn Ireland to the rear end of the broadband league of countries.

Comreg even brags about how it will cut down from the (moon) price Eircom demanded. Doherty and Goggin are totally out of their depth to handle the Eircom threat to bring them to court over this. They fail to calculate into the equation the immense unfair competitive advantage Eircom got by dragging out LLU happening for years.
(The only LLU that was done so far was by Esat/BT; it was heavily grant aided by taxpayers money and still was a financial disaster for Esat/BT and only used for business customers)
As our new Comms Minister thinks (at least that is what he is saying publicly) we are only a short time away from making it to the to 10 percent of broadband countries – not realising that the supra-high Irish bb growth on which he is basing his confidence is not a good sign, but one that puts us into the league of countries like Uganda – he will not intervene and look on as Comreg cancels out most of the advantages the MAN's could have brought.

P.

From a comreg doc:

Paddy20

Oh well, I do not mind waiting a while longer for justice to prevail. Brennan did state that the Government would stand by their free telephone rental scheme, and as I have just paid via online banking the sum of €0.94c [through gritted teeth] for line rental, I think I will shortly apply to Eircon for a refund of the amounts of €0.94c that they have screwed out of me since last April.

Or maybe I will just apply direct to the DSFA in Longford.

Thanks for the info

ro2

Eircom has not deployed any of the newer alternative broadband technologies, SDSL, ASDL 2 and ADSL 2+, and it could be another six months before it begins to offer these.

Does anyone have any more info on this?

Also France Telecom are launching ADSL2+ in Paris on 1st December:

http://www.francetelecom.com/fr/espaces/journalistes/communiques/CP_old/cp041020.html

http://www.free.fr/presse/Cp_Free_201004.pdf

spongebob

ro2 wrote:

Does anyone have any more info on this?

Also France Telecom are launching ADSL2+ in Paris on 1st December:

Good timing Ro2 .
France Telecom use the exact same DSL kit in their exchanges as Eircom .

If it can be done in Paris it can be done in Dublin. The first of those links tells us ADSL2 will go nationwide in the first quarter of 2005 ...in France that is.

It will support speeds of up to 18Mbits .... ...in France that is.

96% population coverage by end 2005 ...in France that is.

It will be available in 100% of exchanges by end 2006 ...in France that is.

We are on target for 18.3% of exchanges by March 2005 with about 70% population coverage in each Eircom provisioned exchange area according to the Eircom SEC filing .

They must be bursting themselves laughing at this country ...in France that is.

M

Paddy20

WoooWeee, Thats real mucky Muck Now pay attention Eircom, Comreg and our new Dear Mr Brennan.

ro2

Muck wrote:

France Telecom use the exact same DSL kit in their exchanges as Eircom

That's good news anyway (for eircom and for the punter). It should reduce the time to deploy it whenever they realise there's a market.

OT: I was looking for over 20Mb of bandwidth to a data centre from my office recently and got the eircom sales team in. It's unbelievable how eircom price their lines - everything is based around multiples of a 64k link. It's almost like they work the price of 20Mb out based on how many phone calls you could make using it.

I also checked out their Business IP and ATM products. Between install costs and the CBR/UBR prices they were turned down.

Then I had a look at the ntl metro link. None of this UBR/CBR rubbish, just a straight 10Mb, 100Mb or Gig-E point to point connection. It's also an ethernet hand off so you don't need 16 cisco wics to install it.

Needless to say eircom lost the business. The moral of the story is eircom management need to stop working prices out based on kilobits and phone calls. If I phone up Global Crossing and ask for 15Mb of transit, they're not going to give me an ethernet port and cap it at 15Mb - they'll let me use the full 100Mb and charge me when I go over 15Mb. Why don't eircom do the same....

spongebob

Greed Obviously. Another factor was that Eircom were obliged to published their Fat Pipe prices, thats over 2Mbit leased line on copper and fibre . The 'competition'in many cases undercuts this by a tad and get the business. Eircom have a very small % of the STM 1 market within Ireland at present...less than 10% .

This will change shortly after recent Comreg consultations that finished in July or so and will result in more realistic prices from Eircom for such circuits and hopefuly for the bog standard leased line as well .

M

ro2

Getting back to ADSL2, since eircom have introduced dsl we've converted most of our teleworkers over from isdn. That has obviously increased the requirements for bandwidth to our VPN. When ADSL2 is introduced this will increase again. Basically the higher the bandwidth of eircoms dsl, the more bandwidth I need in my office. If I was an eircom shareholder I think I'd want to know why they aren't deploying ADSL2, on equipment that they already have, that would mean more sales of their high end links.

spongebob

ro2 wrote:

Getting back to ADSL2, since eircom have introduced dsl we've converted most of our teleworkers over from isdn. That has obviously increased the requirements for bandwidth

Eircom are currently conducting a trial of ADSL2(+?) in South Dublin. This was widely publicised on Boards at the time (search function is bawlixed) but it is confined to one largish housing estate at present . It may actually be a trial of a remote concentrator more than a trial of the DSL tech .

ADSL2 or probably ADSL2+ looks like their next BB deployment sometime next year , they have already used Jamie Smyth to punt it in the Irish Times and are known to be trialling .

M