Isolde Goggin - Opinion Piece in Times

damien

What are others opinions on this ? I'm not sure how it's to be judged. Seems to me she's calling out eircom and putting it to them.

Yes, the usual population density argument is given, as well as the number of computers in households, but the rest of it, the insight on how prices are agreed is interesting.


http://www.timesonline.co.uk/printFriendly/0,,1-528-1430895,00.html

Personal View: Telecoms need the licence to fulfil
Isolde Goggin, Chairwoman of ComReg, the Communications Regulator

DURING its short history, independent telecoms regulation has delivered a good deal for Irish consumers.

Since 1997, prices have grown on average by 30 index points while prices for communications services have decreased by 19 points, according to the Central Statistics Office. Irish telecoms prices compare well against those in other countries of the European Union.

At the same time, broadband take-up now stands at about 130,000 lines and is growing at more than 400% annually.

The demographics pose challenges, however. About 40% of the population lives in rural areas, as against 5-10% in most other developed countries.

Achieving full coverage will mean a reliance on a mixture of technologies, including fixed line, cable, satellite, wireless or mobile telephony.

If broadband penetration is to rise to the levels seen in leading countries, however, the number of households with a PC must increase from the 46.2% as measured by the CSO.

Competition is key to achieving this aim. To this end, the Commission for Communications Regulation (ComReg) has made available large amounts of licensed and unlicensed spectrum for wireless broadband. It has initiated a thorough review of charges for unbundled local loops (which has already led to substantial decreases in process charges). It has used regulation to ensure new entrants can have access to wholesale products from Eircom, thus allowing them to compete.

Recently, however, broadband availability and take-up have hit the headlines. Some say a “lack of regulation” has hampered broadband roll-out and there have been calls for Eircom “to be allowed a return on its assets”.

Eircom operates under “rate of return regulation”, so it is forbidden from earning above a certain rate of return set by ComReg. It is a regulatory approach which aims to stop public utilities from exploiting their monopoly position.

This mechanism can stimulate investment and encourage competition by allowing new entrants access to wholesale products. Equally, it presents problems. The classic example is known as “gold plating”, where companies boost profits through the extravagant and inefficient use of capital.

It works like this: a firm’s prices are regulated; the regulator determines the appropriate cost of capital, and the firm’s prices are set to recover the value of the assets over time. The firm’s managers decide the firm’s HQ could do with a nice feature, such as a sculpture. These then become part of the firm’s asset base and the firm is guaranteed a return on them. So expenditure creeps up, since the firm’s incentive for making efficient investments is diminished.

Rate-of-return regulation must be applied with caution. It is best suited to industries with stable technologies, long investment cycles and homogeneous products.

Telecommunications, however, is a multi-product industry. The same underlying network elements can be used to carry multiple services: voice, fax and data. Some network elements, and hence some products, are suitable for rate-of-return regulation, others are not.

New and innovative services such as broadband are not well suited: companies can misjudge the level of investment required when technology and consumer demand are changing rapidly.

eircomtribunal

damien.m wrote:

What are others opinions on this ? I'm not sure how it's to be judged. Seems to me she's calling out eircom and putting it to them.

Yes, the usual population density argument is given, as well as the number of computers in households, but the rest of it, the insight on how prices are agreed is interesting.


http://www.timesonline.co.uk/printFriendly/0,,1-528-1430895,00.html

The first half of Isolde's article is a selection of ever repeated old manipulative arguments with which ComReg is fooling itself and the public about its "success".
(One could debunk them one by one.)

The second half explains in rather clear language why and how ComReg's regulation of the Telecoms monopolist is not working, especially with broadband.
"Telecommunications, however, is a multi-product industry.Some network elements, and hence some products, are suitable for rate-of-return regulation, others are not.
New and innovative services such as broadband are not well suited: companies can misjudge the level of investment required when technology and consumer demand are changing rapidly."

She is not giving any insight what she thinks the regulator could do to change the unsatisfactory “rate of return regulation”.

P.

Praetorian

Isolde Goggin,

I’m not as well informed as some of my fellow members, but I’m going to give my opinions anyway.

ComReg has made an admirable difference for the Irish consumer, by helping to open the telecommunications markets to greater competition etc. However, it seems like ComReg lacks conviction, can only move at a snails pace and only regulates so ComReg is seen to be doing something, a case of "quick lads, look busy.”

In the mobile market, we are paying extremely high call charges, amongst the highest in Europe, why? The likes of Vodafone and O2 are making huge profit margins off us because our regulator seems to lack balls. Why are you letting them make more money off us than they make off any other citizen in the EU? Reduce their extortionate prices now Isolde!

Land line calls are finally coming down to reasonable levels due to decent competition in the market. My company’s telecommunications bills seem to be approximately staying the same every year, despite our companies increase in turnover and profit. But, why are we paying one of the highest line rental charges in Europe, twice the EU average! I’m not getting value for money. Eircom were losing customers and their margins were dropping, and you let them increase the line rental price three times? Why! Isolde, are you secretly an Eircom employee in disguise? We need line rental competition and not line rental wholesale bullsh1t!

Broadband (ADSL & CABLE). 400% increase per year? Hardly surprising considering we are between 3-5 years behind some countries. The penetration levels are pathetic, and will remain so for years. The bandwidth and ping times available to us are far inferior to our European neighbors. If I hear the demographics excuse again, I’ll scream “look at Denmark!” Local loop unbundling still isn’t feasible due to the huge expense involved, and ComReg have failed to address many of the roadblocks which are in place. Get a move on Goggin!

Broadband (Wireless). Why are you giving licenses to Tom Dick and Harry when they never use them? I believe even Eircom have a 3.5 ghz license that they are just sitting on. We need alternatives to broadband via copper / cable. The paper the licenses are printed on isn’t going to help me surf the web!

How can ComReg spend ~ €12,000,000 per year (2002 figure) and achieve so little. What the hell do the 110 or so ComReg employees do all day? Why have ComReg’s 2003 accounts not been published?

Perhaps we should hire Ofcom; no doubt we would get better value for money.

Slutmonkey57b

Rate-of-return regulation must be applied with caution. It is best suited to industries with stable technologies, long investment cycles and homogeneous products.

Would Ms Goggin care to explain, therefore, why Comreg uses it to regulate an industry that is the exact opposite of these things? We have a consumer-mandated explanation based on member feedback, namely that Comreg are a bunch of lazy morons, but no doubt this informal analysis is "incomplete".

Competition is the key is it? Would Comreg care to explain why we still have no LLU competition after several years and a ministerial directive? Could it be because the pricing structure for LLU access is the most unholy mess in the world? Would Comreg care to explain why there is no internet access competition, merely wholesale-reselling of eircom products? I'd guess not.

Calls for eircom to "have a return on its asset"??
If Comreg don't think that €450 MILLION profit returned to investors in ONE YEAR isn't enough then god help us all. If Comreg don't have to balls to slap Eircom back WITH THEIR OWN PUBLICLY AVAILABLE FIGURES, then we are wasting our time. Eircom have TOLD you what the return they are getting is. What should happen when Eircom peddle the "oh we can't spend all this money ourselves" argument is they should be told:
TOTAL BULLSH!T
and slapped with a copy of their Companies house statements. It doesn't require a consultation. The management of Eircom have been treating Comreg as a joke for years, and rightly so.

Really, I do begin to wonder. The "no PC penetration" argument is straight out of eircom's handbook. It ignores the fact that Ireland has probably the highest levels of console penetration in Europe. Ireland is Sony's largest per-capita market outside Japan. Modern consoles also support broadband gaming - to which Irish consumers have no access. The argument itself just smacks of the whole "the internet is for a small elite wealthy majority" crap that eircom were peddling only a year or so ago.

damien

Slutmonkey57b wrote:

Rate-of-return regulation must be applied with caution. It is best suited to industries with stable technologies, long investment cycles and homogeneous products. ... New and innovative services such as broadband are not well suited

Would Ms Goggin care to explain, therefore, why Comreg uses it to regulate an industry that is the exact opposite of these things?

I think that Ms Goggin wants this question asked and no doubt has the people in ComReg looking at other ways to look at this or maybe they've already come up with something and this was paving the way. The woman is anything but stupid. The fact that the chairwoman of ComReg is mulling this over in a Sunday paper means something.

Does it mean ComReg are going to use another regulatory process for pricing broadband and this is the first signal about it ?

Does it mean ComReg are telling eircom et al to cop the feic on or they might come up with their own pricing method that might not be as favourable to an incumbent ?

Does it mean that they finally becoming a bit more transparent and are saying "this is the crap we have to deal with, when telcos factor in the price of useless statues into capital expenditure and can claim in back in wholesale pricing. " ?

Mr_Man

Could Comreg be saying that the BB market is not the same as the fixed line market and thus does not require regulation ? I wouldn't be surprised given Comreg's track record, and the strange way in which Sir Tony's requests/demands are resolved.

M.

Slutmonkey57b

Does Ms Goggin "want the question asked". Ms Goggin is the chairman of the regulator, at some point she has to realise that the regulator sometimes does not have to "ask" something, it has to "dictate". While eircom as a company can't simply be rode roughshod over, it doesn't follow that the regulator has to go tiptoeing around asking permission from Nolan to do its job as it sees fit.

Does it mean they are finally being transparant?

Well, perhaps it does but I doubt it. If Comreg were to start being transparant they'd have to explain the logic behind some of their most ridiculous decisions, like 0k FIA, LLU pricing, porn diallers, companies sitting on FWA licences they've no intention of using, etc. If Comreg are about to say "look at what we have to deal with, it's a tough old life, oy vay", then the simple response is "look what you let them get away with you idiots."

There's a lot to be said for whether Comreg have the powers they need, but the fact of the matter is they haven't used the powers they've GOT, and the decisions they've made thus far have been nothing short of spineless. It would be nice to think that Ms Goggin is setting out a marker, but until we see some of eircom's more obvious lies officially debunked, then I can't see it happening.

damien

Isolde Goggin interview in Silicon Republic

20.01.2005 - Any communications entrepreneur worth his or her salt should have been at last week’s Wireless Wednesday event in Dublin where it was revealed that in the midst of a general broadband glut Ireland has large volumes of unassigned radio spectrum that could go nicely towards assuaging the desires of a geographically dispersed population hungering for more bandwidth.
It was also a good opportunity for businesspeople to witness first hand the newly appointed chair to the Commission of Communications Regulation (ComReg), Isolde Goggin, who in recent weeks took over the role from John Doherty.

During her short time in office so far Goggin has introduced a number of measures that indicate this will be no ordinary year. Just before Christmas she introduced a directive compelling Vodafone and O2 — with some 94pc of the marketplace — to open up their networks to host mobile virtual network operators (MVNOs). Various operators have since vented their fury and O2 has threatened to take ComReg to the European Court of Justice if forced to host MVNOs.

In person, Goggin appears to be taking such threats in her stride and reminds me that there are still several steps to take before the European Commission gives the nod to MVNOs in the Irish marketplace. “Firstly we had a statutory obligation to review the market. Secondly, we are only doing our duty by acting upon our analysis. It could be a very long road,” she said.

Similarly, on the even more emotive issue of broadband and DSL Goggin appears to want to introduce reason and clarity to the issue. Her ethos seems to be driving towards a period of liberalism and regulation based on economic truths rather than legal pedantry, which could emanate from her previous career with the Competition Authority.

“There is no silver bullet to resolving the broadband problems of this country,” Goggin pointed out. “There are indications, however, that we are moving in the right direction. In the past year we’ve seen a 460pc overall growth rate in broadband. My main issue is to ensure reasonable wholesale rates for DSL. Another issue is local loop unbundling and before Christmas we moved to reduce the cost of licensed telcos accessing Eircom’s exchanges by 50pc. This should translate into increased rollout and lower connection charges for consumers.”

Another point Goggin was anxious to make was that the whole issue of broadband appears to centre on DSL. “There is a danger that DSL is seen as the only way of getting broadband. DSL is not the only solution and we are trying to encourage operators to look at other mechanisms such as wireless and cable,” she said.

It emerged at last week’s Wireless Wednesday that Ireland is leading Europe in the deployment of services on the 5.8GHz spectrum, paving the way for innovative use of new technologies such as WiMax, Ultra Wideband and cognitive radio. At the event Goggin called for greater use of unassigned radio spectrum in the Irish marketplace.

She emphasised that unlike most other EU countries where radio frequencies are congested, Ireland has plenty of spectrum available for operators and entrepreneurs to carve out interesting new business opportunities. Goggin’s colleague, Dave Gunning, director of ComReg’s market framework division, said that each week the regulator is issuing 80 to 100 spectrum licences in applications ranging from public safety and defence to commercial applications.

Goggin indicated that ComReg is currently carrying out a review of the radio spectrum market in Ireland as part of its statutory requirements and said that at present spectrum — defined as including broadcasting, fixed links, air services, mobile and short-range devices — is worth €1.9bn annually in Ireland, approximately 1.4pc of the country’s total economy. The sector employs 24,798 people, according to ComReg figures.

Gunning added that if Ireland succeeds in moving to a more liberalised approach to spectrum “there is no reason why Ireland can’t become a fully wireless country in 10 years’ time.”

Jim Connolly, ComReg’s senior manager in charge of radio spectrum, pointed out that there are currently large amounts of unassigned radio spectrum in the Irish market, particularly in the mobile communications space. “There is a total of 40MHz unassigned in the GSM 1800 (2.5G) space, while there is 25MHz of unassigned spectrum in the 3G space, plus one 3G licence assignment that no one has taken up.”

Connolly added that most of the available 3G space has been set aside for the future enhancement of 3G applications in Ireland such as more video transmission and higher speed data services, but he said that it still leaves considerable chunks of frequency unclaimed. “Future scenarios we have identified could include small regional GSM networks for other service providers in 2KHz blocks made available either by auction or beauty contest.”

Returning to fixed-line issues and wholesale, Goggin felt that it is vital the incumbent operator realises that wholesale should be embraced as a real strategy, as evinced by the performance of BT in the UK whereby the BT wholesale division now outperforms its retail division. “We would argue that there is a good business to be made in wholesale [in the Irish market] and a good return on investment,” she added.

Looking to the remainder of the year, Goggin noted that the advent of voice-over internet protocol (VoIP) could be one of the most exciting developments in the marketplace. “VOIP has the ability to fundamentally change the face of telecoms as we know it. It is our job to pave the way for the marketplace and that’s why we introduced a numbering scheme to give VOIP the same relevance in people’s minds as traditional telephony. We’ve taken a relatively liberal approach to VOIP and, from the consultations we’ve had, VOIP is becoming CD quality in its performance.

“Our key task this year will be implementing the new EU framework for communications and we are ahead of the game — in the first four or five regulators in Europe — in its implementation. The difference between the new framework and the old ways is that everything is being looked at from an economic viewpoint and we are making remarkable progress on that front,” Goggin concluded.

Mr_Man

According to the RTE website Comreg have got the backing of the EU on their study of the Irish mobile market.

M.

eircomtribunal

Mr_Man wrote:

According to the RTE website Comreg have got the backing of the EU on their study of the Irish mobile market.

M.

ComReg's statement is as a pdf on their web site here

Didn't we have virtual mobile phone providers in the early days? Who remembers exactly why and how it came to be stopped? It was done by some court if I remember correctly. What was the involvement of the regulator, which was ComReg's predecessor the ODTR?

P.

cgarvey

eircomtribunal wrote:

Who remembers exactly why and how it came to be stopped? It was done by some court if I remember correctly.

It was, I think, alright. The court ruled that Eircell weren't under an obligation to renew the VO contract. I can't remember the VO but I have a feeling it had 1 in the name somewhere. I'm not sure ODTR were even around then?

.cg

jm2k

cgarvey wrote:

It was, I think, alright. The court ruled that Eircell weren't under an obligation to renew the VO contract. I can't remember the VO but I have a feeling it had 1 in the name somewhere. I'm not sure ODTR were even around then?

.cg

...remember them as well, but thought there was a 3 in the name??
sort of a white and blue logo ...they were undercutting eircell at the time

cgarvey

That's it.. http://url.ie/n google search shows up plenty.

Basically Meridian Telecommunications Ltd. had a child company Cellular Three Ltd. which traded, as an Eircell MVNO, under the Imagine brand. Eircell wanted to pull the plug on the VDA(volume discount agreement) with Cellular 3, who then took them to court based on SMP (significant market power) and an EU access directive (EU’s Access Notice on Telecommunications (para 79).

The court ruled that Eircell hadn't SMP because of its recent rapid decline in market share (58% at the time), and it's price restructuring, brought about by Digifone's competition, and that the EU directive wasn't a valid argument (something along the lines of because of it's lack of definition.. that there was no EU law to state what was and wasn't legally required to tag an operator as having SMP).

Spirit Telecom, the only other MVNO at the time shut up (that particular) shop too .. having spared the expense of the high court case! Their CEO, David Ryan, hit out at the ODTR (sorry Peter, I was wrong on that too!!).

He blamed them for failing to faciliate competition.. but nowhere can I find what it is they did wrong.

My own opinion is that they could have implemented a SMP policy which defines the conditions an operator must have to have SMP status, and that because that didn't exist, there was an ambiguity that existed and that had to be brought to a lengthy high court case (one of the longest/most expensive ones), thereby damaging the whole industry, not just Cellular 3. Having said that, if they had such a policy in place, that could very well have still been contested in the high court. Or they could have introduced proper MVNO regulation, rather than leaving it pretty much up to individual commercial agreements.

The TCM article quotes Ryan hitting out at ODTR, but he doesn't say what they did/didn't do. He does say that the court saying Eircell didn't have SMP was an insult. I'd agree, based purely on what I've just googled/read, but I'm not a judge!!

Some useful links...
Competition Authority presentation mentioning the case.. http://url.ie/o
International Competition Network case study http://url.ie/p
TCM report http://url.ie/q

.cg

eoinm1

eircomtribunal wrote:

ComReg's statement is as a pdf on their web site here

Didn't we have virtual mobile phone providers in the early days? Who remembers exactly why and how it came to be stopped? It was done by some court if I remember correctly. What was the involvement of the regulator, which was ComReg's predecessor the ODTR?

P.

This was the group I think Peter: http://www.imaginemobile.com/
They had some contract with Eircell to buy bulk air time and then resell it.
Can't remember all the details but it was called Imagine Mobile and eircell did take them to court to stop the service or contract.

Eóin

(Off topic how did your complaint against eircom sponsorship of RTE weather go?)

eoinm1

A bit of linkage for Imagine Mobile.

http://archives.tcm.ie/irishexaminer/2000/11/16/current/bpage_3.htm
http://archives.tcm.ie/irishexaminer/2001/04/06/current/bpage_3.htm
http://archives.tcm.ie/irishexaminer/2001/04/25/story1265.asp

http://www.rte.ie/business/2001/0411/odtr.html

__________________________
In 1997 Eircell signed a volume discount agreement with Meridian, selling Imagine airtime at a 40% discount. In 1999 Eircell wanted to terminate the contract and Meridian decided to pursue its case and claimed Eircell was using its size to force it out of the market.
__________________________

__________________________
Wednesday, April 25, 2001 :

ellular3 closure imminent after lengthy court battle


CELLULAR3, the company that runs the Imagine mobile phone brand, looks set to close next month with the loss of 240 jobs.Cellular3 cut 40 jobs yesterday and has placed its remaining staff on notice which will expire in May. The company has taken the action following its lengthy court case against Eircell.
Imagine buys airtime from Eircell and sells it to its 20,000 subscribers at a 25% discount and is reported to be looking to sell the subscriber base for £10m.
Eircell terminated its discount agreement with Imagine earlier this month.
___________________________

See here for more linkage: clicky linky.

Eóin


Edit: Dam just noticed that cgarvey beat me to it.

eircomtribunal

The ST published part of my reply to Isolde Goggin's praise of ComReg.
http://www.timesonline.co.uk/newspaper/0,,2765-1452217,00.html

My full letter read:

A reply to Isolde Goggin’s article in the Sunday Times, January 09, 2005
“Personal View: Telecoms need the licence to fulfil”


The article by Irish Communications Regulator (ComReg) chairwoman Isolde Goggin is remarkable in two ways:

1. In the first half of her piece Isolde Gogging displays all the usual self congratulation and skilled manipulation of facts we are used to from ComReg’s Quarterly Reports. The brass neck attitude is extraordinary, starting with her claim to have delivered a “good deal for Irish consumers” when the whole country is aware that the opposite has happened:

Thanks to ComReg’s failed regulatory efforts we have:
• By far the highest telephone line rental in Europe, combined with a deteriorating second class copper network;
• Substantially higher than EU average residential and business phone costs (according to the latest independent OECD basket measurements);
• Substantially higher than EU average mobile phone costs, actually the Irish consumer pays top of EU mobile bills.
• Substantially above EU average broadband pricing;
• The worst broadband availability in Europe, bar Greece;
• The lowest broadband take-up in Europe, bar Greece (for her to tout our 130 000 broadband connection figure and our “400% growth” is another brass neck act, counting on the naivety of the public: To be at the EU average – as the Communications Minister has directed ComReg to bring Ireland by Mid 2005 – we would need to have some 320 000 to 360 000 broadband connections; our 400% growth rate puts us in the category of Third World countries and Isolde knows very well that growth rate from an extremely low basis is meaningless);
• The second highest EU LLU pricing (just been fixed for the next three years by ComReg);
• One of the lowest Internet penetrations of households in the EU (The figures in ComReg’s December Quarterly Report show that our household Internet penetration has declined by 5% in the last year, from an already extremely low 37%. This is an extraordinary worrying development, when all around us Internet/broadband usage is soaring.);
• A decline in online shopping since one year ago (according to ComReg’s own figures).

When Isolde states “If broadband penetration is to rise to the levels seen in leading countries, however, the number of households with a PC must increase from the 46.2%” she tries to blame our low computer penetration for the lack of broadband uptake, when indeed the lack of broadband availability (currently at under 60% of households!) and high price (well above the EU average now and moon-priced up to recently) has stunted the growth of computer penetration. We know from abroad that computer and Internet/broadband growth go hand in hand.

2. The second half of Isolde Goggin’s article is interesting. She brings forward a new explanation, why ComReg’s regulatory efforts have brought Ireland to the bottom of the EU league of Broadband countries: She suggests that “rate-of-return regulation”, as practiced by ComReg, is not working: “New and innovative services such as broadband are not well suited..”

This recognition comes too late: Ireland will take a long time to move up from the bottom of the broadband league tables where a failed regulatory regime has placed it. And it will not happen with the current regulator staying in office.

I would not be amazed to see Communications Minister Noel Dempsey act as the independent report (recently commissioned) about the regulator suggests: “In Ireland’s case a price cap of CPI - 10% for the regulator(s) for five years would encourage moves towards developing effective competition and reducing the scope of regulation. The base point for the regulator’s price cap should reflect ComReg’s actual regulatory outlays rather than its revenue.” ("Is Utility Regulation Failing Irish Consumers?", Quarterly Economic Commentary, Winter 2004. - 21/12/2004; by Patrick Massey ) But in the end much more than a price cap on ComReg is necessary to change the situation.

P.