[Business post] Eircom asks state to foot €200m bill to fix carriers

damien

http://thepost.ie/post/pages/p/story.aspx-qqqt=NEWS-qqqs=news-qqqid=18313-qqqx=1.asp

Eircom is preparing to ask the government to pay up to €200 million to fix a problem with its network, which is holding back the rollout of broadband in rural areas. The government has said it will fund the upgrading of some rural phone exchanges where broadband is not economically viable, but Eircom wants it to go further and fix the problem of shared lines.

The problem arose in the 1980s when the government directed that Telecom Eireann should speed up the process of installing a telephone line into every home that wanted one. As a result, shortcuts were taken which meant that, in some cases, two houses shared one line.

The issue is not a problem for normal telephone services, but it means in some rural areas, on a single road, one person can get broadband while another cannot. Eircom is to enter talks with the Department of Communications about exactly how it plans to fund the upgrading of rural phone exchanges to make broadband available in all parts of the country.

Sources close to Eircom said the government tender to upgrade those exchanges should also include fixing the problem of shared lines, or ‘carriers’ as they are called. The exact number of lines around the country affected by the problem has not been disclosed, but the cost of fixing it would be around €200 million, The Sunday Business Post has learned.

New Eircom chairman Pierre Danon highlighted the problem when he addressed a conference hosted by employers’ group Ibec in Dublin last week. He said the government was right at the time to install these carriers as away of pressing ahead with making telephone services available to more homes. But he did say it had to be fixed.

Danon did not say who would pay the multimillion euro cost of fixing the problem. A spokesman for Eircom said there would be a tender process by the government for the roll-out of broadband to the 10 per cent of homes in rural areas where it cannot be accessed, and that tender should also include the carrier issue.

Describing it as a ‘‘legacy issue’’, he added that nothing had been finalised in relation to Eircom’s position on the subject of how the tender would work. If the government’s tender does include rectifying the carrier issue, it means the cost will ultimately be borne by the taxpayer.

What's the betting they'll say yes and still not fix LLU?

viking

damien.m wrote:

What's the betting they'll say yes and still not fix LLU?

Perhaps we could contact Paddy Power for odds? They'd be very short no doubt, or even odds on...

Realistically, the tender process for the upgrading of exchanges is simply a formality. It WILL go to eircom, they know this and hence the sudden suggestion that "carrier removal" should be included in the tender.

Or perhaps the government informed eircom that they would be including availability guarantees for lines connected to exchanges funded by tax payers money. This would royally fúck things up for eircom as winning the tender would then mean a rather large net loss if availability guarantees needed to be met and huge numbers of carriers had to be removed and new copper laid in place of them.

In all likelyhood, if the government say no to eircom's "suggestion" that carrier removal should be included in the tender, it is very unlikely that these carriers will be removed in the short to medium term by eircom themselves. Therefore, if the gov agree to this request, it will fix a very large problem that exists with DSL rollout and availability should increase dramatically as I have heard that the amount of carriers within eircom's network is "staggering".

lucernarian

A bit laudable of eircom to point out how the government should spend its revenues. When that company decides to enable new exchanges already connected with fibre and pass lines that Smart saw fit to pass, then they can turn to the government and ask for help.

10% is a nice sounding number. A pity it contradicts the figures that eircom provided to the Oireachtas. But I shouldn't really let facts get in the way of sympathy-seeking. Poor old eircom didn't know what it was doing when it enabled its first exchanges and continued to pairgain those lines.

watty

They have a cheek. Putting line rental to one of highest in Europe years ago to be able to invest, then asset strip (e.g. sell Mobile phone part), then spend mucho buying Meteor rather than upgrading the network.

It would be like if I bought a €10,000 home cinema system and then pestered my TD for better school kid grant.

Sponge Bob

This €200m plan to rob the taxpayer is simply unacceptable (it is not in the least consistent the second of my 2 90s.) . Nor does eircom guarantee anybody anything for this money , its 'give us €200m to fix our decrepit network that we let fall down ourselves ' ta .

eircom refuses to admit in public that it is NOW willing to remove pairgains at its own expense in the 5 largest cities as promised during the week and to maintain its own network to a reasonable standard in these areas and ONLY in these areas which of course are the 5 areas where they face most competition from every other delivery platform cable/3g/wisp/fibre/man/llu

Quite simply its time for the government to look at an SLA based tender in the rest of the country (not the 5 largest cities ) now that eircom have said they are focusing ONLY on those cities and to see what the best packages and consortia are to deliver a universal service for its €200m

I would wager that a combination of WISPs and/or Mobile carriers could come up with a far better deployment of resources and if they take a unit such as a county or a region and contract to supply EVERYBODY in that area with a GUARANTEED service of NN Bits at a FIXED price (to the state) then thats what is required.

eircom are banking that a weak and incompetent minister, faced with the end of his ministerial career after an imminent election where his myriad failures will be a live issue , will give them all the funds he has available for MAN and GBS for the next 3 years (IE €200m) and thereby hobble the development of acceptable telecoms services in rural Ireland for the next 10 years.

Hopefully the fool will stand back from the brink before he pisses away €200m or our money for no guarantees of anything.

gerryo

Sponge Bob wrote:

..eircom refuses to admit in public that it is NOW willing to remove pairgains at its own expense in the 5 largest cities as promised during the week..

What!, there are pairgains in cities, that's an abomination.

Whatever about rural areas, there was or never will be an acceptable reason to install such devices in towns. It smacks of short sightedness of the highest order & a total lack of forward planning.

bminish

There is also an oft repeated suggestion that pairgains, rurtel and other crap were all 80's issues. it's simply not true. Much of the crap on the network occurred post flotation.

I know of people around here that were put on pairgains within the last couple of years, often as a result of someone else ordering ISDN

A couple of years ago a good number of people a few Km outside (beyond the then in place 3.5Km ADSL distance limit) of Westport were conned into giving up perfectly good clean copper lines for Airspan wireless. One householder, on my advice Told Eircom to feck off and now passes for ADSL, His neighbours are stuck in dialup land.
These lines were freed up so that people closer to town could be moved to copper pairs for ISDN and ADSL

These things all occurred after the flotation and were still going on When tony was the Owner.

200, Million buys an awful lot of wireless and as we have already seen Eircom will dig into their own pockets to follow where other operators have already gone.

.brendan

damien

I guess it's time for wireless providers to get together and start lobbying like hell then isn't it?

Sponge Bob

Time for all the wireless operators to give accurate data to broadband.gov.ie and not leave 'the field' to the sat operators

BMinish is correct, pairgains are a 1990s thing not a 1980s thing , does anybody remember those 'why not get two lines for voice and dialup ' offers that were so prevalent in the second half of 1990s .

In the 1980s there was enough copper out there , eircom then laid off thousands of linesmen in the early 1990s and that was when the copper deficit and the maintenance deficit started. 15 years later it is a rotten crumbling crapheap and all the money that used to be spent on the network is spent on paying interest on the €4bn worth of bonds that O Reilly and Soros and Pierres new Australian employers have loaded onto eircom since the turn of the century. eircom owed nobody anything in 1999/2000 .

Having bled the network dry they are now turning their attention on the taxpayer who already pays the highest line rental on the planet . This plan is unacceptable. Unless eircom dramatically rewrite their own USO so that Universal means exactly what it says on the can they should get nothing from the taxpayer. Yet they expect the taxpayer to stump this cash up with no guarantee to the individual taxpayer as to what service they will get.

The only good news is that Pierre after only 4 months involvement has recognised there is a problem, O 'Reilly did not give two hoots when he was chairman and he happily increased line rental 3 or 4 times thereby bleeding his dialup customer and our government who pay the social welfare line rental for our pensioners. Paying dearly for crap dialup + pensioners + fixing the crap is a treble whammy for the taxpayer.

Lets punt the project out to all operators and see what €200m could really get us .

eircom have defined the areas they wish to serve, Dublin Cork Limerick Galwy and Waterford are their focus and the other half (or more) or the population have been told that they are the governments problem now not eircoms .

netwhizkid

I am in favour of this, but first let me explain.

Eircom were privatised by the Fianna Fail Government, who cannot see beyond their noses in terms of the Future. Since then we have all seen what has happened, Eircom has been asset stripped and they have spent millions on getting rid of their own staff, most have civil servant status since the time of Telecom Eireann and the P&T, They even qualify for benchmarking etc.

The Government were too lazy to fix the problems or put in the money, and this is a legacy issue from the days of state ownership. Didn't Albert Reynold's declare that he put a phone on your desk within 4 weeks or something??? Thus shortcuts were taken for short term Fianna Fail Political gain.

This is a golden opportunity to right the wrongs and legislate for the future, I say give Eircom the money, however not a cheque from Noel to Rex Comb with the "go buy sweets" mentality. It should be given on the basis of that every penny is spent on eradicating carrier's and upgrading exchanges to broadband and aswell as extending the 5KM limit. It could legislate that LLU go ahead also, I am sure that Eircom want this money badly as their network could be rated alongside any 3rd world one, they savagely in debt etc.

I firmly believe that the Network should never have into private ownership anyway, I am in favour of stringent regulation and level playing field scenario should occur not the Smart Debacle. After all Eircom and DSL IMO is the best hope for broadband competitiveness. I myself am trying to get Wireless with Permanet and if I do get it I shall be tied in with them forever unless some other crowd come along.

My point is that DSL and Eircom offer's competition, where as Wireless, Cable and FTTH is a closed shop, one operator charging what they like, the incidences of the various option being all available all at once so the different platforms can compete is negligible. DSL LLU where by the Eircom Exchange is upgraded puts me as a consumer have the choice of a multitude of providers.

DSL is the only option to offer true competition, to dumb it down further I shall compare The Roads and the Railways, DSL = The Road which anybody can use. Wireless, Cable and FTTH = The Railways one service usually expensive, slow in a lot of cases (not FTTH) and you have other choice only pay the high charge or get off. DSL regulation is working so well in the USA that Verizon is pulling out copper (which is regulated) and replacing it with Fibre so as to keep the other operators out, it is benefiting as Fibre is a vastly superior product and when a Fibre Network is built the right thing to do is then one sweep of a Biro by politicians and let the other operators into the Fibre Network. That is competition, that is Neo-Liberalism that Works, that's the American way.

However knowing the benevolent Noel who likes to hang out with Opus Dei will give Eircom a blank cheque and get mugged again.

SkepticOne

I would tend to be against giving Eircom a big pile of money to consolidate their monopoly given that Eircom's monopoly has been the problem all along, though I can see the attractiveness of it from Eircom's point of view.

I predicted a while ago that once Eircom succeeded in convincing DCMNR that the tax-payer should pay Eircom to upgrade Eircom exchanges in rural areas that Eircom would then move on to the far more lucrative proposition of getting the tax-payer to fund Eircom's infrastructrural monopoly.

There is now a small but growing amount of wireless competition in some rural areas. This competition is able to use Eircom's underfunding of their own network to gain a foothold. Clearly, from Eircom's point of view, this is unacceptable. Without government funding, Eircom would have to dig into their own pockets to maintain their monopoly - also, naturally, unacceptable to Eircom.

Sponge Bob

Its also interesting to note the post o'reilly board composition , the current and previous boards contain one Cathal Magee, Mr Band 13 himself and Peter E Lynch the CFO along with Brother Con.

Peter Lynch is a busy man and is geting busier because Peter Lynch the long term eircom Board member has the ear of government , especially when there is an election on.

Peter is a significant Fianna Fáil Fundraiser you see. Who amongst us would not , after all, help the democratic process along were €200m available to the company of which one is CFO and with no nasty tenders or any of that transparency cack to deal with either.

If any of Peters mates in FF come canvassing to your door in rural Ireland I have helpfully prepared a little leaflet below that you can print out yourself and hand it to the FFer so that he can then send it on to Peter in St Stephens Green Eircom HQ with your compliments and best wishes

Foxwood

There's no point removing carriers unless they are running new lines. (Pair
gains were needed because there weren't enough lines to go round). And if
they're running new lines, they should be running fibre, rather than copper.
Most of the cost in a job like this is labour, not materials.

And there's no reason why eircom should get the job. Indeed, there would be
grounds for excluding eircom from the tendering process, or at least
handicapping them, on the basis of "encouraging new entrants to the market".
If that's good enough for the mobile market, why not for the replacement
landline business?

Or how about this - get eircom to sell their major city exchanges to e-net for 200 million, and let e-net manage the LLU process in those exchanges. Eircom would have to become an LLU customer if they wanted to keep their customers in those exhanges!

And then there's the 75 million per year that eircom get from the Department of Social Welfare. There's an awful lot that a governmnet that was truely committed to competition could do with that contract.

watty

eircom won't part with the exchanges. It's the line rental they make major money from, after the exhorbitant dailup time charge for internet.

This 200M is not money eircom need. It is the theory that it would stop any more GBS funding. How much income per month does eircom have?

gerryo

Foxwood wrote:

..And if they're running new lines, they should be running fibre, rather than copper.

I agree, however, you can't hook fibre into a standard phone, you need some sort of interface/converter box. Also phones are traditionally powered from the line, fibre connections need a local power source + backup (in case mains supply is lost).

I still think fibre is the way to go, but it's a paradigm shift.
If smart can do it, why not Eircom?

Sponge Bob

gerryo wrote:

I agree, however, you can't hook fibre into a standard phone, you need some sort of interface/converter box. Also phones are traditionally powered from the line, fibre connections need a local power source + backup (in case mains supply is lost).

generally the old copper from the exchange to the fibre point that is no longer needed in that area is used to provide power and a battery backup is also installed .

heres an example , its hardly huge

http://www.criticaltelecom.com/products/geminiplatform.php

http://www.criticaltelecom.com/products/images/sam1.jpg

Blaster99

watty wrote:

eircom won't part with the exchanges. It's the line rental they make major money from, after the exhorbitant dailup time charge for internet.

This 200M is not money eircom need. It is the theory that it would stop any more GBS funding. How much income per month does eircom have?

GBS and MANs strike me as a get-out-clause for the government to protect them against criticism of poor telecoms regulation. I bet if GBS is looked at it in a cold light you'll find that spending €200m on fixing phone lines is better spent. That's not to say that it's the best way to spend €200m, but it's probably better than spending it on GBS.

viking

Blaster99 wrote:

I bet if GBS is looked at it in a cold light you'll find that spending €200m on fixing phone lines is better spent. That's not to say that it's the best way to spend €200m, but it's probably better than spending it on GBS.

There are some very valid criticisms of the GBS around but I disagree with your view that spending €200m on fixing phone lines is "better spent".

Firstly, how do we define "better spent"? Does 'better spent' mean more immediate broadband availability but at what cost, shouldn't "competition" and "fairness" be kept in mind when defining "better spent"?

The GBS was/is a supplier and technology neutral project, any ISP including eircom could apply for funding to enable a particular area. Same with the MAN's, any company is free to purchase bandwidth on a ring. Both help to further competition to some degree.

Handing €200m of our money to eicom benefits them directly and does not foster competition in the real sense to any degree. It only serves to copper-fasten their monopoly even further.

bealtine

viking wrote:

Handing €200m of our money to eicom benefits them directly and does not foster competition in the real sense to any degree. It only serves to copper-fasten their monopoly even further.

How can it be shown that this €200m doesn't go to service debt?
Will, for instance, BT or Magnet be able to tender for this process?

Is it not somewhat of a coincidence that there is 200m on offer for GBS schemes and suddenly the cost of enabling rural exchanges equals 200m?

Sponge Bob

bealtine wrote:

Is it not somewhat of a coincidence that there is 200m on offer for GBS schemes and suddenly the cost of enabling rural exchanges equals 200m?

The cost of enabling rural exchanges and cleaning up pairgains within 5km of those exchanges (according to eircom) is €200m which is actually ALL the money available nationally for MANs and for GBSs in the financial years 2007-2009 inclusive .

And thats no co-incidence at all my friend if they don't do it the DCMNR will have no funds for plan B until 2010 . Therefore we reflect on this and should ask ourselves this simple question .

"Do You Feel Lucky ? "

bealtine

Sponge Bob wrote:

The cost of enabling rural exchanges and cleaning up pairgains within 5km of those exchanges (according to eircom) is €200m which is actually ALL the money available nationally for MANs and for GBSs in the financial years 2007-2009 inclusive .

I'm certain the EU would have an interest in a payment of that magnitude....

Where now are all the pious (Opus Dei anyone) bleatings about competition being "good for consumers" we heard about last week in relation to Aer Lingus?
If it is bad in one sphere that 70% monopoly is "bad" then how can a 90+% monopoly be "ok"?

Blaster99

viking wrote:

how do we define "better spent"?

I would make it simple and say "the least number of euros per subscriber". I'm not sure the government should subsidise eircom's competitors any more than they should subsidise eircom, so the least amount of money to solve the problem will do it for me. The affected areas are not ripe for competition in any event or they would have had broadband already in some shape or form.

oscarBravo

Blaster99 wrote:

I would make it simple and say "the least number of euros per subscriber". I'm not sure the government should subsidise eircom's competitors any more than they should subsidise eircom, so the least amount of money to solve the problem will do it for me.

This is based on the premise that giving Eircom money actually would solve the problem. Does anyone actually believe this? It's also a given that to subsidise Eircom would further entrench their monopoly. Does anyone think this is a good idea?

Whatever issues you have with funding Eircom's competitors, at least it's fostering competition.

Blaster99 wrote:

The affected areas are not ripe for competition in any event or they would have had broadband already in some shape or form.

As I've already pointed out, that's not necessarily a valid assumption.

Liam Byrne

If you ask me, it's a blatant cheek!

The people who bought eircom paid for everything that the Irish people had paid for through their taxes, with the Irish people getting nothing in return. What the new owners bought was the infrastructure that they have since been overcharging for - even companies like BT that only resell eircom's wholesale offering can manage to charge less for it.

If eircom want the business, they should pay for it; if they don't, they should be forced to leave it to whomever can supply the best service at the best price, and with everyone (Smart, BT, etc) offering better services and better prices, eircom is the last company that should be given taxpayers money to achieve the result.

Put it out to tender and let the best offering win the grant.

cgarvey

The Irish tax payer got cash in return.

You can't just force eircom to hand over something they've bought and paid for.

Blaster99

oscarBravo wrote:

This is based on the premise that giving Eircom money actually would solve the problem. Does anyone actually believe this? It's also a given that to subsidise Eircom would further entrench their monopoly. Does anyone think this is a good idea?

I'm assuming that the powers that be can define a meaningful SLA. I'm also assuming that it would be open tender.

So your argument is that it's better for the country that eircom cannot deliver broadband? That's a perspective that only a competitor could have, dare I suggest.

Another thing nobody has picked up on is that it's pointless to remove splitters or certainly all of them. Only some 20-30% of phone line users would be interested in broadband in the next couple of years so you can move the splitters around the place to work around the problem or gradually remove them. So we don't need to spend the €200m at all most likely...

Liam Byrne

cgarvey wrote:

You can't just force eircom to hand over something they've bought and paid for.

No, but having bought what was there at a price that, for the taxpayer, was ****e, likewise eircom can't expect the taxpayer to fund improvements.

If you buy a house that needs renovations and investment, then you pay an appropriate price and take on the remainder yourself.

If you haven't done enough research to realise that what you're getting mightn't be what you expected, then whose fault is that ?

dahamsta

The question we should be asking is why the Government isn't legislating for line rental discounts for people that are on carriers, since they're not getting the same product as everyone else. The question we should be asking is why Eircom got the last line rental increase, and why the current request is even being considered. The question we should be asking is why anyone that reads this forum would actually vote for those in government.

adam

oscarBravo

Blaster99 wrote:

I'm assuming that the powers that be can define a meaningful SLA.

With respect, that's a naive assumption. Not so much that they could, as much as that they would.

Blaster99 wrote:

So your argument is that it's better for the country that eircom cannot deliver broadband?

Not at all. My argument is that if Eircom refuse to deliver broadband, to pay them to do so is effectively caving in to blackmail.

Blaster99 wrote:

That's a perspective that only a competitor could have, dare I suggest.

I don't hide the fact that I'm a competitor to Eircom. I also don't hide my disgust at the possibility of being forced out of business - a business I set up to address Eircom's reluctance to provide a service in rural areas - by the government subsidising Eircom to compete with me.

wiredup

oscarBravo wrote:

With respect, that's a naive assumption. Not so much that they could, as much as that they would. Not at all. My argument is that if Eircom refuse to deliver broadband, to pay them to do so is effectively caving in to blackmail. I don't hide the fact that I'm a competitor to Eircom. I also don't hide my disgust at the possibility of being forced out of business - a business I set up to address Eircom's reluctance to provide a service in rural areas - by the government subsidising Eircom to compete with me.

Isn't there EU laws to cover this? I agree with you 100%.
What is beyond me is it's Eircoms network, the nerve of them!!!
God this company should be split up. Also, people need to be educated about moving their line rental from Eircom. I think most people think they have to use Eircom.

With regards Westnet. Why is is taking so long to expand your network and coverage area? You have been in position for a while now to build a massive customer base without competition. Most people around Mayo/Castlebar have never even heard of Westnet.
I contacted you last year asking for some literature that I could display in our village informing people about your services. I bet I could have got 30-50 pre orders. I had no reply.
With the deepest respect, I think your company need to be taking advantage of this unique situation. When the competition arrives and it will arrive, things won't be so easy. At the moment, you can get your potential customers to do most of the work for you.

uncle_sam_ie

wiredup wrote:

With regards Westnet. Why is is taking so long to expand your network and coverage area? You have been in position for a while now to build a massive customer base without competition. Most people around Mayo/Castlebar have never even heard of Westnet.
I contacted you last year asking for some literature that I could display in our village informing people about your services. I bet I could have got 30-50 pre orders. I had no reply.
With the deepest respect, I think your company need to be taking advantage of this unique situation. When the competition arrives and it will arrive, things won't be so easy. At the moment, you can get your potential customers to do most of the work for you.

I find this with a lot of Irish businesses. Customer service just doesn't exist here.
Rule of Acquisition #57 Good customers are as rare as Latinum; treasure them.