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eircom dead now that upc announce new speeds and cheaper prices
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Threads merged, no need for more than 1.0
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People really need to look at this from the bigger picture.
Eircom are 4 billion in debt and are getting slaughtered by UPC and the mobile companies in urban areas.
Rural areas are irrelevant as they are far less profitable then urban areas.
Eircom is in serious trouble and I can't see what they can do to survive. I expect they will have to declare bankruptcy soon.
Yes, but then UPC does have one of the best value for money and cheapest packages on the market.
12Mb/1.2Mb BB + 120GB cap + phone for just €32
Eircoms cheapest package is 8Mb/0.5Mb + 10GB cap + phone for €46
Plus in general UPC's BB is far more stable and reliable then Eircoms.
Wow had no idea that Eircom are that f**ked!
So, from the point of view of us culchies who have to rely on the Eircom backbone (ie the only cable-based broadband we can get is either from Eircom directly or via a reseller), where will get our broadband? Mobile broadband (3G / HSDPA) does not count IMO. Will UPC come riding in on horseback with their fibreoptic cables, or will Eircom's network and hardware be divvied up between a few local resellers? Intriguing times ahead it would seem.0 -
wheresmybeaver wrote: »Wow had no idea that Eircom are that f**ked!
So, from the point of view of us culchies who have to rely on the Eircom backbone (ie the only cable-based broadband we can get is either from Eircom directly or via a reseller), where will get our broadband? Mobile broadband (3G / HSDPA) does not count IMO. Will UPC come riding in on horseback with their fibreoptic cables, or will Eircom's network and hardware be divvied up between a few local resellers? Intriguing times ahead it would seem.
From what I can see, the national telecommunications infrastructure would be better off if Eircom did fold. Its license would be auctioned off and the infrastructure would end up in the hands of someone who actually had a budget and who didn't have a massive debt burden.0 -
Eircom still has a monopoly in the vast majority of Ireland, outside the major urban areas! So I think they still have a captive market! Also UPC arent all they sell themselves to be! Be Warned!0
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billyboy01 wrote: »Eircom still has a monopoly in the vast majority of Ireland, outside the major urban areas! So I think they still have a captive market! Also UPC arent all they sell themselves to be! Be Warned!0
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billyboy01 wrote: »Eircom still has a monopoly in the vast majority of Ireland, outside the major urban areas!
I have to laugh when I hear this.
You mean the vast empty wilderness of Ireland. Over two thirds of Ireland population live in urban areas. UPC cable already passes over half the homes in Ireland and I'm sure that will increase in time.
I don't get why people find this concept so hard to understand.0 -
You have a limited amount of resources, why waste what little you have trying to compete against Liberty Global (UPC)?
If Eircom were smart, they wouldn't bother upgrading any line in Dublin (or other UPC cabled areas in Ireland) and instead try to capture as much of the market in the gateway/hubs towns as laid out in the National Spacial Strategy (Figure 4 page 22 of 115).0 -
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D'Peoples Voice wrote: »You have a limited amount of resources, why waste what little you have trying to compete against Liberty Global (UPC)?
If Eircom were smart, they wouldn't bother upgrading any line in Dublin (or other UPC cabled areas in Ireland) and instead try to capture as much of the market in the gateway/hubs towns as laid out in the National Spacial Strategy (Figure 4 page 22 of 115).
You are suggesting that Eircom basically gives up on two thirds of their current customers and leaves them for UPC, that would be suicide!!
Also UPC will likely also be coming to the Gateway/hubs towns eventually if they have MAN's and are connected to BT, ESB, etc. fibre networks.0 -
You are suggesting that Eircom basically gives up on two thirds of their current customers and leaves them for UPC, that would be suicide!!
Here is why. Take the urban area of Bray, mentioned on this thread a few times. Now Eircom can spend hundreds of thousands upgrading the lines in the area.
They will usually be faced with two types of broadband customer, those that want/need high broadband speeds and those that settle for low broadband speeds. When UPC come in and undercut them in price, in a recession, Eircom will lose those customers in the high broadband market, irrespective of UPC's customer service record. Eircom are left with customers in the low broadband speed market. But would their existing DSL infrastrucutre not suffice for these people anyway? To keep the low broadband users sweet, they could have just offered free minutes on Metero or emobile and save themselves the cost of infrastructure.
In other words they will have made an investment that leaves them with the same type of customer as previously. So the net present value of that investment will be lower than expected.
INSTEAD of spending the money in Bray, they could sit back and say, well we have a competitive advantage in other parts of the country that we already have a level of infrastructure, whereas UPC would have to start from scratch in those areas. Lets concentrate in those areas where we have a competitive advantage.
We know that urban centres like Portlaoise and Tuam will have a higher demand for broadband than somewhere like Caherdaniel in Kerry. So Eircom spends the money on infrastructure in the urban centre to deliver relatively decent levels of DSL broadband and in the rural area push meteor's "mobile to go", along with some free minutes on meteor mobile/emobile and improve the masts in the area to keep the people sweet.0 -
The thing is this isn't unique to Ireland, all traditional telcos are in the same boat when it comes to infrastructure. The major difference is that most of them didn't manage to mysteriously almost bankrupt themselves...
eircom's financial situation's absolutely unbelievable. They shouldn't be in this state, they were turning over good money all through the boom, faced very limited competition and they spent very little on their network in comparison to other networks in other comparable countries.
I mean, come on they'd practical a monopoly on services for way too long, yet they managed to go into huge debt?! It raises a lot of questions about what they were up to.
Chorus and NTL were hardly competition before UPC came along i.e. they spent nothing on their networks.
A €4 billion euro debt is just mad stuff, worthy of a bank!0 -
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That's unregulated capitalism for ya, baby :-)
At the risk of diverting the thread from it's purpose, and boring the bejeesus out of yiz, here : http://www.cep25.com/documents/private%20equity.pdf is a rather dry document called "The Private Equity Takeover of Telecom Infrastructure in Denmark:
Implications for Network Development and Public Policy"
It's actually good stuff, re eircom, in section 4.
To save you reading it all, here's the good bit:
"When eircom was privatised by the government in 1998, it was (sic) relatively inefficient in comparison to incumbent telecom operators in Europe, and in need of significant infrastructure investment. The shares were offered to the public and purchased by a wide cross-section of Irish citizens.
In late 2001, the Valentia private equity consortium acquired eircom with a leveraged buyout. After the acquisition eircom repaid Valentia debt by issuing bonds which increased its debt from about 25% to 70% of its capital 7
structure. Its net debt/EBITDA ratio increased from less than one to more than three.
It was transformed from an operator with a large sustainable (but unused) long-term investment capacity reserve, to one with a financial structure that was unsustainable for long-term investment. This is borne out by eircom’s activity after the takeover."
Basically after this, eircom cut way back on investment in infrastructure, so that it could pay back the Valentia debt.
And then it got worse :-)
The document is reasonably short. Have a read if you're interested a nice summary.0 -
billyboy01 wrote: »Eircom still has a monopoly in the vast majority of Ireland, outside the major urban areas! So I think they still have a captive market! Also UPC arent all they sell themselves to be! Be Warned!
Are you mad? In quite a lot of rural areas, mobile "broadband" provides a far superior service to eircoms DSL. In fact, if Eircom were to completely stop business, there are plenty of BB alternatives in rural areas.D'Peoples Voice wrote: »Yes, I am.
Here is why. Take the urban area of Bray, mentioned on this thread a few times. Now Eircom can spend hundreds of thousands upgrading the lines in the area.
They will usually be faced with two types of broadband customer, those that want/need high broadb......................................We know that urban centres like Portlaoise and Tuam will have a higher demand for broadband than somewhere like Caherdaniel in Kerry. So Eircom spends the money on infrastructure in the urban centre to deliver relatively decent levels of DSL broadband and in the rural area push meteor's "mobile to go", along with some free minutes on meteor mobile/emobile and improve the masts in the area to keep the people sweet.
While I totally agree with your idea, I really doubt that Eircom have the resources or funds to fully develop any of the areas that UPC can't provide to yet, regardless of if those towns have the basic infrastructure in place or not.
"A lot done, f*ckin' way more to do." :pac:0 -
UPC was made up of two companies before. One of them, Chorus, was itself bankrupt albeit not as spectacularly as eircom is today. Lets say it was not challenging eircom shall we.
Chorus was such a sh1theap that the entire company mainly including its debt which was assumed in full went for under €100m the lot...less than €500 per cable home.
Chorus could serve 220,000 homes for cable at the time and up to 440,000 with MMDS. NTL passed 470,000 homes but had a much smaller MMDS operation . That was 690,000 cabled homes around 2005.
Between them ( and a few small acquisitions like Clane) and the tail end of the housing bubble and some investing in the past 6 years UPC now have much better quality cable overall and pass 840,000 homes with cable.
eircom will inevitably collapse ( as a debt carcass) in the next few years. The 'new' eircom that rises from that restructuring will certainly invest more and have a lot less debt but I think there will be too much of a gap between them and UPC by then.0 -
I have to laugh when I hear this.
You mean the vast empty wilderness of Ireland. Over two thirds of Ireland population live in urban areas. UPC cable already passes over half the homes in Ireland and I'm sure that will increase in time.
I don't get why people find this concept so hard to understand.
UPC have offered absolutely no plans to cable up completely new areas but then they are more than busy fixing their existing network and replacing the MMDS backhaul that they used for various places particularly in Limerick, Cork and north co. Dublin.
I believe the Castlebar network is partially built since 10 years ago but it has lain idle since by Chorus and UPC. UPC as Liberty Global Europe have owned Chorus since at least 2005 and they've done nothing about Castlebar yet.0 -
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To_be_confirmed wrote: »Vast empty wilderness?? Drogheda and Dundalk both hardly count?
No offence meant, but yes, populations of 35,000 and 30,000 make them pretty small towns from the point of view any company and not worth much effort.
All the places you talk about are pretty low density, which is the important point in deciding to roll out cable or not.
And in the end it is still irrelevant to the question of Eircoms survival. Eircom can't live off the scraps of UPC in the areas that UPC doesn't compete in.0 -
That's a combined population of about the size of Galway and only a single stretch of ESB fibre makes the difference between building a network from scratch in those two towns as opposed to building one in Galway. Objectively speaking, how could that be looked on as small fry? No offence was taken by the way! Speaking of smaller fry, Newbridge has had its cable network rebuilt and that was in a town of not even 15,000 people I think.
The point of all that is that UPC have a massive amount of work to do before they offer anything comparable to the DSL coverage of eircom which is in the low to mid 80%s of households currently by my estimates and assuming that pairgain use has fallen even further than in 2007. They can't truly be regarded as a national operator when there's literally a hundred thousand houses or so in urban areas which have never been within an ass' roar of UPC cable yet generally have had access to eircom DSL since 2003/2004.
As it stands, eircom can't live off the scraps with their network but all it takes is for eircom to downsize further and to target any fibre rollouts in the future at the areas that UPC seem to have forgotten about.0 -
To_be_confirmed wrote: »As it stands, eircom can't live off the scraps with their network but all it takes is for eircom to downsize further and to target any fibre rollouts in the future at the areas that UPC seem to have forgotten about.0
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To_be_confirmed wrote: »As it stands, eircom can't live off the scraps with their network but all it takes is for eircom to downsize further and to target any fibre rollouts in the future at the areas that UPC seem to have forgotten about.0
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However, currently Eircom have a huge amount of debt they need to finance. Downsizing wouldn't help them pay off that debt, and that is what is going to be the death of Eircom.
Think ChannelTunnel and debt restructure!
Creditors have to ask themselves if they will get more money under a debt restrucutre than they will under a liquidation of Eircom!More importantly, its costs per phone line are about €200, roughly double those of cable TV operator UPC, which is eating its lunch with a cheap triple play offering of television, phone and broadband.
On Tuesday, the company warned that it could default on its €3.8 billion debt within the next 12 to 18 months unless remedial action is taken.
“You can’t have a situation where you are losing 1,300 fixed lines a week and maintain labour costs which are constant. So it’s really important that we can achieve the efficiencies that are necessary to have costs on a par with our competitors.”
Sources suggest that up to €300 million might be needed. That could be a bit rich for the Esot, which owns 35 per cent of Eircom. Many former employees would probably prefer to get a tax-free dividend rather than see their funds pumped into Eircom.0 -
D'Peoples Voice wrote: »Think ChannelTunnel and debt restructure!
Creditors have to ask themselves if they will get more money under a debt restrucutre than they will under a liquidation of Eircom!0 -
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UPC, by comparison are adding 1,000 customer a week
In the last reported quarter they added 15,700 internet customers in 13 week.
1 in 3 homes which COULD get UPC broadband have UPC broadband.
They added just under 1,000 Telephony subscribers a week in that same period. I think you can get telephony without broadband but if not then we can say that most people who take broadband also take telephony.0 -
Downsizing would work if all Eircom had to worry about was their working capital. Not making enough money? Let some people go and cut back on some expenses to get back to profit, easy. However, currently Eircom have a huge amount of debt they need to finance. Effectively, that is a fixed expense (at least in the short/medium term), and they cannot easily get out of paying it. Even if they negotiated a capital holiday, the interest is huge. Downsizing wouldn't help them pay off that debt, and that is what is going to be the death of Eircom. While UPC might not be competing for all Eircom's customers, they are competing for most, if not all, Eircom's most profitable customers, and Eircom needs them in order to be able to pay off the existing debt.
Sky could benefit greatly from working with eircom to provide a proper fibre based access network. Video on demand and bundling etc. This is very hypothetical of course but if this did happen then UPC would not be happy bunnies. Their TV service is definitely weaker than Sky's (ignoring any pricing)0 -
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To_be_confirmed wrote: »That's a combined population of about the size of Galway and only a single stretch of ESB fibre makes the difference between building a network from scratch in those two towns as opposed to building one in Galway. Objectively speaking, how could that be looked on as small fry? No offence was taken by the way! Speaking of smaller fry, Newbridge has had its cable network rebuilt and that was in a town of not even 15,000 people I think.
I'm sure they will get to them eventually. UPC are a private company, they are spending their own money rolling out new cable and will invest where they get the greatest return on their investment and then work their way down the list.
I'm sure upgrading any places that already have cable, but not phone + bb, are the first priority. A lot of the infrastructure is already in place and you already have a relationship with the customer there. Getting existing customers to upgrade is much easier then building a new network and convincing people to join.
BTW Some smaller towns have cable, because the cable network was first installed by small local family run business's in these towns, which ended up getting bought up by Chorus and NTL over the years and eventually taken over by UPC.To_be_confirmed wrote: »The point of all that is that UPC have a massive amount of work to do before they offer anything comparable to the DSL coverage of eircom which is in the low to mid 80%s of households currently by my estimates and assuming that pairgain use has fallen even further than in 2007. They can't truly be regarded as a national operator when there's literally a hundred thousand houses or so in urban areas which have never been within an ass' roar of UPC cable yet generally have had access to eircom DSL since 2003/2004.
With UPC cable passing well over 50% of homes in Ireland, they can certainly be considered a national operator. Sure they have a long way to go yet, it would be brilliant if they passed 100% of homes. But the market is far better and healthier for their presence.
UPC also have a very positive effect on people who can't get UPC. Eircom has been forced to drop their prices over the years due to competition from UPC, which benefits all Eircom customers.To_be_confirmed wrote: »As it stands, eircom can't live off the scraps with their network but all it takes is for eircom to downsize further and to target any fibre rollouts in the future at the areas that UPC seem to have forgotten about.
As others have pointed out, not possible due to the size of their debt. They will end have to go bankrupt or restructure their debt in order to survive.0 -
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To_be_confirmed wrote: »True, and that's why I stuck in the "in the future" bit. That debt restructuring is inevitable as far as I can see. Eircom are possibly simply not interested in paying off that debt and may go as far as is legally possible to be in a position to default. When the shenanigans is cleared up and eircom is less leveraged then STT could come along and invest heavily along with state help or with some sort of partner or other.
True, but how long will that take? Followed by how long will it take them to built out a FTTC/H network?
How many customers will they have lost forever to UPC, etc. by then?
UPC are already three to four years ahead of Eircom on this. Could Eircom end up being 5 to 6 years behind UPC?
Even Eircoms future planned FTTC/H network (50Mb/20Mb VDSL 2, 150Mb/50Mb FTTH) looks pretty weak compared to what UPC offers today, never mind what UPC can offer in the future (200Mb/50Mb using existing gear).To_be_confirmed wrote: »Sky could benefit greatly from working with eircom to provide a proper fibre based access network. Video on demand and bundling etc. This is very hypothetical of course but if this did happen then UPC would not be happy bunnies. Their TV service is definitely weaker than Sky's (ignoring any pricing)
Yes I think it is only a matter of time before Sky enters the Irish BB market. But I don't think Sky will want to do that or partner with Eircom until Eircom sorts out it's mess.0 -
SB, where did you get the figures on UPC's cable penetration? I have heard UPC mention 840,000 houses before but I was suprised at this and I wonder if they included MMDS or not. MMDS wouldn't be a fair comparison.
In any case, figures I looked at from the Dept of the Environment say there are 1,730,000 occupied houses in Ireland including holiday homes. Many people who have holiday homes would like some sort of internet access there so I included them (70,000) in the total. Assuming UPC's figures are a fair reflection of proper cable services, that equates to less than 50% of all occupied Irish housing passed by their cable network
That doesn't put them in the league of national operator when they don't even have a cable network in a number of counties. Newstalk operate from a wide variety of broadcasting sites and I daresay have greater coverage than 50% of households on FM but they are described as "quasi-national" for a reason.
I clarified what I meant by eircom's investment in the future in another post.
UPC do have a positive effect on broadband competition nationwide as they are big enough to do so but that's the reason behind why this thread exists. To discuss how UPC are having a big effect on eircom and whether eircom can change as a company to meet this challenge. This secondary effect of UPC's increasing availability is welcome but it won't change the fact that eircom still are the only show in town.
The interesting thing with UPC as they stand and eircom's problems is that UPC have a few years I'd say while eircom sorts their debt problem out and then figures out how they will comprehensively rebuild their network and business model. That few years gives UPC a decent opportunity to considerably increase their coverage, so I'll wait in hope!0 -
I strongly suspect that eircom will reach a serious crisis very soon. I can't see how they'll refinance anything in the current market, particularly given the state of the rest of the Irish economy and our credit rating as a nation. They've got to be seen as very risky.
There's no guarantee that STT will do anything to bale them out. They might have to let eircom go to the wall. The amounts of money involved are enormous as are the risks.
Without massive investment, there's no way that a traditional PSTN provider can compete in the medium term, never mind the long term!
I was kind of wondering if BT pulled out of the residential market here because they're preparing the way to bid for eircom's business / whatever remains of it in a few years.
Their not being in the residential / retail market would make such a bid very easy from a competition law perspective.
eircom's network would be a very good strategic fit for BT and the marketing campaigns and product development overlap perfectly too.
eircom's most valuable asset at the moment is probably Meteor Mobile which is growing and highly profitable. After that, the network infrastructure is worth something.
However, I would say the wireline local access business i.e. the traditional telephony / DSL / ISDN product offering has to be costing them money to operate at this stage. Failure to invest in upgrading physical infrastructure will cost them very dearly as time progresses.
eircom's core network's pretty good. They've got things like a national ethernet based platform which can provide gigabit connections in most major urban areas and even medium / small towns that are on the NGN.
However, what will kill them is that they haven't invested anything in their access networks. The same physical infrastructure that was put in place by P&T and Telecom Eireann before privatization is still forming the basis of the access network. So, you're basically depending on 1970s and 80s copper wires, many of which aren't in a great state of repair due to ever-reducing maintenance standards.
They're failing to rollout ADSL2+ in a lot of exchanges, which would improve performance and at least get a bit more reach in rural areas.
They shouldn't have any problem rolling out fibre-to-kerb in almost any city or town in Ireland. It's not very complicated to do and it involves very similar technology to what is being used by UPC. i.e. they replace old concentrator cabinets with new fibre-powered cabinets in each housing estate. We're all familiar with the usual eircom green junction box cabinet that you'll find scattered around any urban area / town.
Once they're upgraded to fibre powered nodes, you can then provide at the very least reliable 24mbit/s DSL, VDSL which goes up quite a bit faster than that and ultimately replace some lines with fibre-to-home as customers request higher speeds.
Since they haven't done anything other than a test of this technology around Dundrum, they are basically nearly a decade behind where UPC is.
I feel that at this stage the best outcome for consumers would be if eircom were to go bust and its license were auctioned off. This would let the state auction off the company's license and force the sale of its infrastructure to a company that was actually in a position to operate the network properly and develop it to a decent standard.
I think the ideal situation would be where the state took control of the local wires, cabinets and ducts and levied operators to maintain them as open infrastructure.
Whatever's left of eircom would probably be better off in the hands of a large European telco like BT, Deutche Telekom, France Telecom, Telefonica, Telia-Sonera etc etc. At least it would give it the expertise and buying power that those companies have.
Eircom has suffered from being tossed from speculator, to hedge fund, to speculator. It needs proper ownership if it's going to actually work as a utility company.
Eircom faces a situation in a few years, where if it does not invest, traditional wireline DSL products will actually be slower than mainstream mobile products and cable / fibre from UPC will be vastly superior to it.
They risk becoming totally obsolete if they don't act.
We are not very far away from mobile operators / wISPs being able to provide 50mbit/s via a small antenna on your wall / roof and there's nothing to stop them from providing landline replacement service, several of them already do.
Once that technology's stable and well proven, eircom are totally finished.0 -
With UPC cable passing well over 50% of homes in Ireland, they can certainly be considered a national operator.
Their network is not growing and they enabled 70k homes for BB last year meaning they may finish their network upgrades some time in 2014 or so but the remaining towns include Arklow Kildare Ballinasloe, Nenagh etc.0 -
Bk, you're being a little skewed with your opinion of eircom's prospects. That idea of customers being "lost forever" to eircom is a bit far-fetched especially when there are still lots of people in UPC areas who are on DSL. I don't have a breakdown of those numbers but I know people in that situation and not all because of elderly customers wanting to stick with what they know. One friend of mine didn't bother switching over to UPC even though he uses torrents and file sharing websites quite a lot because 8 mbps was enough for him, it worked reliably and the 20 minute wait for various downloads didn't bother him.
Also, dragging up pricing from some still hypothetical FTTH trial down in Wexford is hardly a fair comparison to make with UPC especially when UPC's speed tiering and pricing when the trial was announced was far less than it is today. A FTTH network is always going to beat a coax network for speeds if a company wished to.
SB, the list that you have in white font for some reason includes several towns which do have cable broadband available. Also, some of those places have cable networks that only serve a few streets and old housing estates from the 60s and early 70s. I think Navan is one such example (ignoring Johnstown) but perhaps UPC has done work there recently.0 -
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To_be_confirmed wrote: »This secondary effect of UPC's increasing availability is welcome but it won't change the fact that eircom still are the only show in town.
But they aren't. You seem to be limiting the conversation to just UPC, while I would also include the mobile 3G companies.
In urban areas where UPC are present (and don't forget the most valuable customers), UPC are wiping them out.
In rural areas, mobile 3G BB, while crappy, is often almost as fast as Eircom DSL *, while being significantly cheaper.
* As to what people in rural areas realistically get on the ends of long rotting copper lines, not advertised speeds.
The once defense Eircom has against the mobile 3G operators is the ability to give a larger download cap. But this will also be eroded in time as the mobile operators roll out more fibre to their base stations (see three's recent deal with BT) and LTE.
Eircom are basically being squeezed from both sides, at the top end premium market they are being squeezed by UPC, in the low end they are being squeezed by the value for money mobile BB operators.
They can't reach the high speeds of UPC, nor the low prices of the mobile operators. They are basically being left with a very small niche, customers who live in areas without UPC, but who want a big cap and are willing to pay three times the price of mobile BB.
Doesn't look good for them.To_be_confirmed wrote: »The interesting thing with UPC as they stand and eircom's problems is that UPC have a few years I'd say while eircom sorts their debt problem out and then figures out how they will comprehensively rebuild their network and business model. That few years gives UPC a decent opportunity to considerably increase their coverage, so I'll wait in hope!
This time is definitely a golden opportunity to grow their market aggressively and corner the market. However I'd imagine they will focus on bb enabling their entire existing network first and up selling their existing customers to triple play before looking to expanding their network.0 -
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UPC are actually well-financed enough to do both new build and upgrades.
eircom on the other hand...
It's a bit like Tesco competing with an over-mortgaged corner-shop, that hasn't redecorated since the 1970s and refuses point blank to innovate. The corner-shop isn't going to come out well.0
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