[Release] Eircom Quarterlies Show Failure to Reach Own Broadband Target

damien

http://lists.ie/pipermail/media/2005/000042.html

Eircom Quarterlies Show Failure to Reach Own Broadband Target

Eircom today announced its first quarter results stating it had 156,000 retail and wholesale broadband customers as of August 18, compared with 150,000 on July 25. Eircom, having previously set themselves a target of 500,000 retail and wholesale broadband connections by December 2007, are clearly falling well short of the required numbers of monthly signups needed to reach this target.

Speaking today IrelandOffline spokesperson John Timmons stated "The current rate of new customer signups is approximately 1,750 per week. At this rate, eircom will not reach their self-set target of 500,000 broadband customers until mid-2009. Despite their recent advertising blitz for their "timed and fined" product 'Broadband Time', eircom are not getting the numbers needed to bring Ireland in line with the rest of the EU. This is a prime example of eircom's failure to provide widespread broadband availability at a price that people are willing to pay and this strategy is shooting eircom, and Ireland, in the foot".

Ireland is currently languishing last of 24 countries in a recent OECD report on broadband uptake[1]. DSL availability is sitting at 62%[2] not the 80-90% "coverage" figure eircom uses, which does not consider the 20-25% of customer lines that will fail to carry broadband.

Gareth Pelly from IrelandOffline added, "The current broadband figures indicate a population penetration rate of 4.4%. If Ireland were at the EU average of 12%, we would have 450,000 broadband connections right now. Eircom is attempting to balance its growth in broadband customers with the loss of revenue that occurs when dialup customers migrate to broadband. This balancing act is having a direct impact on Ireland's broadband penetration figures"

"In the US and in the UK there are now more broadband users than dialup. In Ireland there are more than three times as many dialup users than broadband users.[3] In a survey we carried out, the results of which are soon to be released, one of the main reasons people told us they stayed on dialup is because they cannot get broadband, despite all the advertising claiming their is nothing stopping them."

Timmons commented "Eircom do not see the incentive in losing dial-up users to broadband and ComReg and Minister Dempsey are not doing anything tangible to encourage this move such as making Local Loop Unbundling a reality, bringing about stricter regulation, streamlining the appeals process and introducing fines which are in line with reality.

Until ComReg and Minister Dempsey get tough and force eircom to make broadband available to all their customers we will see more missed targets, broken promises, PR spin and a continuation of Ireland being a nation of dial-up users".

Notes:

[1]http://www.oecd.org/document/60/0,2340,en_2825_495656_2496764_1_1_1_1,00.html

[2] Eircom SEC filing, page 55: "As of 31 March 2005, we had 240 sites equipped with ADSL nodes, covering approximately 1.52 million working paths. Approximately 77% of paths (1.17 million) connected to these nodes would be capable of carrying ADSL." This indicates a failure rate of 23% on ADSL lines 77% of 80% = 61.6% actual availability.

[3] Eircom SEC filing, page 27: "We are also the leading Internet service provider,(ISP), in Ireland with approximately 602,000 subscribers as of 31 March 2005 [...] approximately 128,000 PSTN lines that were enabled for simultaneous support of PSTN and ADSL [...] had been taken up by retail and wholesale customers".
(602,000 - 128,000 = 474,000 narrowband customers)

cgarvey

A more official looking URL .. http://www.irelandoffline.org/home/article.php?story=20050825192846573

damien

http://breakingnews.ie/2005/08/25/story217896.html

paulm17781

damien.m wrote:

http://breakingnews.ie/2005/08/25/story217896.html

Did anyone notice the side panel says "Minister for Communications, Dermot Ahern, is to look into the latest price increase in the cost of fixed line rental from eircom. "

What's wrong with that sentence? :rolleyes:

cgarvey

I missed that question asked earlier, so I got no biscuits back then .. I gues it'd be unfair to answer it now and rob the biscuits, even if by posting I've already given a hint!!

viking

Irish Times

Eircom posts €77m quarterly profit but slow broadband take-up hits margins

Analysts say the addition of 13,000 new broadband users is disappointing, writes Barry O'Halloran

Telecoms company Eircom posted €77 million in pre-tax profits in the three months to the end of June, but figures show that its efforts to attract broadband subscribers are hitting its margins.

The company yesterday did not comment on US-based search engine Google's launch of a free internet-based call service. However, senior figures within Eircom said they did not see the move having any impact on the business for the time being.

Google will initially limit the new service to the US, but does eventually intend to roll it out across the globe. One Eircom source pointed out that the service would ultimately increase internet use. "That would be good for our business," the source said.

Eircom's revenues for the three-month period, the first quarter of its fiscal year, dipped €2 million to €399 million on the same quarter in 2004.

Turnover for voice traffic - conventional phone calls - dropped 8 per cent to €128 million, but sales from interconnection services rose 25 per cent to €46 million.

Operating profits were €112 million, compared with €25 million during the same period in 2004.

A one-off €46 million gain from the sale of property lifted pre-tax profits to €77 million. During its first quarter last year, Eircom lost €6 million before tax.

Most of the headline results were a restatement under new international financial reporting standards (IFRS) of figures the company issued last month, and were broadly expected by the markets.

However, analysts were critical of the rate at which the company is signing up new customers to its broadband services.

The figures show that the company signed up 13,000 new broadband subscribers in the three-month period, a performance analysts described as disappointing.

The introduction of cheaper prices and new talk time options sped up the monthly take-up since the end of the quarter. The company took on 6,000 new customers between July 25th and August 18th, bringing total broadband subscriber numbers to 156,000.

That was the equivalent of 7,700 per month, compared with just over 4,000 a month between the end of March and the end of June.

However, analyst Tricia McEvoy of NCB Stockbrokers pointed out yesterday that this meant that the company's efforts to attract new subscribers were continuing to cut into its margins.

Ireland Off-line, a lobby group for business and consumer internet users, said yesterday that at its current take-up rate, Eircom would not reach its target of 500,000 subscribers by December 2007 until at least two years later.

Eircom's share price dropped five cent or 2.8 per cent to close at €1.75 in Dublin yesterday. Dealers said that the poor broadband performance and the fact that the market was aware of most of the figures were the main reasons for the lack of investor interest.

The company is about to embark on a rights issue to pay for its proposed €420 million takeover of mobile operator Meteor. It is set to publish the prospectus later today or early next week.

The figures also indicated that Eircom's competitors have been making some inroads into its fixed-line customer base.

Bríd White of Merrion Stockbrokers pointed out yesterday that during the first quarter, the company had rented out 8.7 per cent of its lines to other operators.

Ms White said that this figure was ahead of the firm's expectations and indicated that alternative operators had made significant progress in the market since single billing was introduced just over a year ago.

© The Irish Times

viking

Strangely, The Indo fails to properly mention the lacklustre signup rate and instead repeat what eircom's Finance Director says about being on track for 500,000.

And while some analysts said that its broadband figures were disappointing, Peter Lynch, Eircom's finance director told analysts in a conference call that the company was still on schedule to reach its target of 500,000 broadband customers by the end of 2007.

WTF!

Its amazing to think that a company's finance director is so bad at maths... worrying in fact.

Blaster99

Who's to say that the growth is going to be linear? If you look historically, I doubt it has been linear.

paulm17781

Blaster99 wrote:

Who's to say that the growth is going to be linear? If you look historically, I doubt it has been linear.

Yes but as yet there is no sign of a surge in customers. More to the point there is absoultely nothing to suggest they will meet their target.

viking

Blaster99 wrote:

Who's to say that the growth is going to be linear? If you look historically, I doubt it has been linear.

I agree, in fact who's to say whether there might even be negative growth month-on-month?

Target = 500,000
Current = 156,000
_______________
Shortfall = 344,000

Months left till 12/2007 = 28 months

344,000 / 28 = 12,286

So on average over the next 28 months, eircom needs to signup 12,286 new customers every month in order to meet the target. Don't forget, there are also people cancelling broadband for various reasons so that 12.286 number only stands if no customers cancel BB. In reality they will need to sign up even more.

Every month that they do not meet this 12.286 figure, means that the average gets pushed up and they need to sign even more people yet again in order to meet their target.

I would genuinely like to see 500,000 BB users in Ireland, but somehow it looks like an overly ambitious target in the current market. I'd love to see eircom's projections and be corrected.

Gareth

Blaster99

I don't really track Eircom's signups but I seem to recall that let's say a year ago they were signing up a lot less than 1,700 a week, more like 400-500 perhaps. (I'm more than willing to be corrected on this) If I also recall, Eircom tends to show a curve of typical takeup as it has happened in most countries and Eircom is to the left of the curve because they started late. I would think they assume that Ireland will more or less follow this curve as availability increases, price decreases, competition increases, and general momentum increases. I would think that curve is probably a lot more likely than assuming a linear development as takeup growth has never been linear.

Also, who really cares what Eircom does at the end of the day? There are a lot of other ISP's (non-Eircom resellers) signing up hundreds of customers a week so if you look at the bigger picture, I'd say it's quite likely that the numbers will be reached. Possibly not by Eircom but that's irrelevant in the scheme of things.

viking

Blaster99 wrote:

Also, who really cares what Eircom does at the end of the day? There are a lot of other ISP's (non-Eircom resellers) signing up hundreds of customers a week so if you look at the bigger picture, I'd say it's quite likely that the numbers will be reached. Possibly not by Eircom but that's irrelevant in the scheme of things.

Eircom own the network and since LLU is not a (functioning) reality they control and dictate the services that are available on it including bitstream DSL packages, so we should care what eircom do.

Also, the 500,000 figure includes retail and wholesale broadband connections, eircom fail to fully point this out when they announce the amount of connections they have. Its not solely the amount of customers that Eircom Retail has, its the amount of those customers plus all the other customers OLO's have via bitstream that makes up this total.

paulm17781

Blaster99 wrote:

Also, who really cares what Eircom does at the end of the day? There are a lot of other ISP's (non-Eircom resellers) signing up hundreds of customers a week so if you look at the bigger picture, I'd say it's quite likely that the numbers will be reached. Possibly not by Eircom but that's irrelevant in the scheme of things.

The figure isn't 500,000 BB users, it's Eircom (and reseller) BB users so it is quite important what Eircom do in this case.

Blaster99

If you own Eircom shares.

eircomtribunal

Another excellent press release from IOFFL.

Whenever the media, the regulator or gov people repeat the incumbent's deliberate misinformation about current dls availability, they should be challenged.


About the 500 000-by-end-of-2007 figure:

We should not forget that this is an Eircom goal and not "our", not government and not "the" goal. It would be a first victory for Eircom to establish their company goal as the de-facto goal.

In Oct 2004 Noel Dempsey asked the industry to reach 500 000 broadband connections by the end of 2006 and only recently claimed in his siliconrepublic interview to be confident that this goal would be reached!
(But then Noel seems to have a weakness for the figure of 500 000 in all kinds of circumstances; google Noel Dempsey 500000!)

According to his 21/10/2004 speech at the TIF conference our Communications minister states:
"Let me nail a myth here. These figures [growth so far] place Ireland favourably in the league tables for broadband, and indicate that the Government's objective of a top 10% OECD position is within early reach."
He goes on to say: "The real challenge industry should set itself is 500,000 by end 2006."

Interestingly he promised: "I intend to publish a quarterly report, starting from November 1st [2004!], on broadband customer growth numbers by company."

As long as Eircom is allowed to make a killing out of "free"(sic!) dial-up, subscription dial-up (a total rip-off) and fake (Eircom calls it "partial flat-rate" in its SEC filing) flat-rate dial-up, we will see no real (as opposed to PR spin) drive by Eircom to really go for broadband roll-out (coverage and aggressive pricing) and we will not see the necessary increase in Internet usage.

Keeping the Irish Internet user watching the clock when on the Internet and charging extraordinary prices for it, has all but killed Internet usage. With a dismal and practically stagnant 37% home Internet penetration we cannot progress on the broadband front beyond a rather low plateau. (The French show that it is possible to achieve bb success coming from a low Internet usage rate; in their case by offering very widely available, very cheap, very high speed Broadband + tv channels + telephony).

Without radical change on the regulatory and gov policy front Ireland will not crawl up from second last place in the EU-15.

A young, educated, English-speaking country back at second last place...a regulator waffling excuses of dot.com crash, missing apartment blocks and low PC penetration as the cause... a minister who still has no inhibitions to mention the early reach of a place in the top 10% of the OECD... a media that still re-gurgitates most of the PR spin of the mighty incumbent, who has no inhibitions about taking half a billion from the piggy...a "workers union" in the company that has its eyes firmly fixed on short term profiteering...

P.

SkepticOne

I think we should care about those who want broadband and can't get it.

I can't see the point in berating Eircom for not sufficiently monopolising the DSL wholesale market. That is just playing into Eircom's hands as far as I can see.

Eircom's executives must just love it when they see people complaining that Eircom don't have sufficient share of the market.

dub45

Doing devil's advociate a bit here but based on talking to some 'average' people lately (by that I mean people who are not big into pcs etc etc) I wonder is there a market of 500,000 in Ireland for bb? Quite a few people have said to me lately that they can do all they want on their pc in work ( I know not everyone has a pc in work!) and others have said to me that they are afraid of their kids spending too much time on the net - note these were not concerned about porn or mysterous strangers just things like messenger which kept their kids from studying - one parent said to me at least when the phone is engaged i Know they are on the net with bb id never know. Anybody else picking up these or similar attitudes out there?

DonegalMan

damien.m wrote:

Gareth Pelly from IrelandOffline added, "The current broadband figures indicate a population penetration rate of 4.4%. If Ireland were at the EU average of 12%, we would have 450,000 broadband connections right now.
.....

[2] Eircom SEC filing, page 55: This indicates a failure rate of 23% on ADSL lines 77% of 80% = 61.6% actual availability.

[3] Eircom SEC filing, page 27: "We are also the leading Internet service provider,(ISP), in Ireland with approximately 602,000 subscribers as of 31 March 2005

These figures give the lie to claims about lack of interest in Broadband being the issue.

4.4% is a dismal peformance but it is actually a rate of over 7% among those who can actually get Broadband - still well short of the EU average but certainly going in the right direction.

With over 600,000 people in total paying in one way or another to access the Internet, there is no question about the demand, the issue is getting people to switch to Broadband - Eircom puts every possible obstacle in their path for switching and then has the neck to claim a lack of interest !

DonegalMan

dub45 wrote:

Doing devil's advociate a bit here but based on talking to some 'average' people lately (by that I mean people who are not big into pcs etc etc) I wonder is there a market of 500,000 in Ireland for bb? Quite a few people have said to me lately ...

The same people who 10 years ago said "Nah, you'll never see me with a mobile phone!"

Cork

"One of the main reasons people told us they stayed on dialup is because they cannot get broadband, despite all the advertising claiming their is nothing stopping them."

Is the failure rate still around 40%.

Is there a table that shows the % our European neigbours are still using dial up to access the net?

Sponge Bob

DonegalMan wrote:

4.4% is a dismal peformance but it is actually a rate of over 7% among those who can actually get Broadband - still well short of the EU average but certainly going in the right direction.

Its over 10% penetration without taking DSL figures into account in areas that have NTL BB but thats probably because they dont have to pay ridiculous line rental to anyone.

eircomtribunal

Cork wrote:

Is the failure rate still around 40%.

It is not so much a failure rate of 40%.
According to Eircom (2005 SEC filing) 80% of lines originate from broadband enabled exchanges and 77% of those are capable to carry dls.
Hence: 0.8 x 0.77 = 0.616; on 61% of lines dsl is available.

This is the dsl availability rate of lines.
(Availability to end-users would still be lower.
As the DCMNR had asked ComReg to bring Ireland to at least the EU-15 average for end-user broadband availability by mid 2005, the regulator should have measured and reported on this figure – instead ComReg lied to the Minister by reporting: "Overall coverage levels for access to Broadband now exceed 75% and are in line with the European average as outlined in the March 2004 Policy Direction.")

Is there a table that shows the % our European neigbours are still using dial up to access the net?

In the UK there are now more than 50% of Internet users connecting by means of broadband, same in the US.
I did not look for figures in the leading European Broadband countries, but would assume that they are well over 50%.

In the Broadband laggard country Germany there are only 34% of home Internet users connecting by dsl.

With these comparisons one has to keep in mind that we in Ireland have only a home Internet penetration of some 37%, whereas in Germany some 61% are connected. Meaning:
We have a very low Internet penetration and on top of that only a small fraction (20% – 25%) is using broadband.
All the rest of punters are paying through the nose for their pitiful small Internet usage.
5,311,000,000 yearly data minutes are currently shared by the 600,000 Eircom Internet users. That is an average of 12 and a half hours of Internet usage per month and user at dial-up modem speed (most as per minute dial-up, a lot as per minute dial-up+subscription and a little as prepaid minutes=Irish FRIACO)
Average cost for Internet usage is currently above €30 per month – for 12 hours of Internet usage!

P.

eircomtribunal

A footnote to the above post, concerning France and Germany:

Internet Users in Europe: Broadband vs. Dial-Up

Breaking down Internet users by broadband and dial-up (accessed from all locations) shows that nearly 60% of all French Internet users accessed the Internet from a broadband connection in 2004 compared with only 32.1% in Germany. It is worth noting that ISDN (integrated subscriber digital network) technology is very popular in Germany (11 million subscribers) and typically provides the end-user with bandwidth of 128kbps - twice the rate of normal dial-up connections, which may go some way in explaining why dial-up still is enormously popular in Germany.

Recent data from Nielsen//NetRatings indicates that high-speed Internet users accessing the Net from home grew 60% throughout Europe in 2004, but France, the UK and Italy experienced growth far in excess of that.

P.

Cork

Thanks for that.

McRedmond also said that Eircom is seeking funding from the government to extend broadband coverage to the entire fixed-line network, matching the achievements of BT in Northern Ireland and Scotland. He said that EU competition laws would not prohibit government funding for the project, since the government aid would be spent on rural areas that are considered to be disadvantaged.

From ENN.

It is about time - effective regulation kicked in.

zuma

Cork wrote:

Thanks for that.




From ENN.

It is about time - effective regulation kicked in.

No way in hell should eircom be given the money!!!!

They want huge money for this...far, far more than whats needed!

The government should install the equipment themselves using private contractors from outside Ireland and then get eircom to rent from them!

They have been cribbing about getting government funding for years...but wanting MASSIVE money for it.
BT did similar in NI...but quoted more reasonable prices as it isnt in huge debt unlike eircom!

Blaster99

If this is to be subsidised, maybe the thing to do is to subsidise per connected subscriber on a falling scale as obviously this stuff will be profitable at some point. This would apply to any ISP and in Eircom's case it means that they need to sort out the lines as well as install the equipment and Eircom shares the risk and if Eircom meets significant subscriber targets, it won't really cost us anything at all. We can divert some of the farming subsidies to pay for this stuff as well.

zuma

Blaster99 wrote:

We can divert some of the farming subsidies to pay for this stuff as well.

Dont say that...the farmers will riot and begin to shoot people "tresspassing" on their land while hikeing!!!

Honestly though...if this equipment is to be installed...get someone else to do it...and save a shítload as eircom couldnt give a toss how available broadband is, only how much money they can make from it!!!
Get BT to install it....I'm sure they could do it far cheaper than eircom!!!!

150k BB & 450k DialUp equates to good money....decreasing DialUp subscribers means less money for eircom.
My last DialUp bill(wasnt on those set hors/month plans like the vast majority) was €130!!!!!
That equates to 3 months of 2Mbit Broadband!!!!!
eircom would love us all back on DialUp!!!!

eircomtribunal

zuma wrote:

My last DialUp bill(wasnt on those set hors/month plans like the vast majority) was €130!!!!!

Most of Eircom's profit from data traffic on PSTN and ISDN is not at all from the more economical pre-paid hours packages (falsely sold as flat-rate), but from pay by the minute dial-up (of both the "free" and the "subscription" variety).
In fact only 811,000,000 minutes of the total 5,052,000,000 narrowband data minutes (of business year ending March 2005) are sold via the FRIACO products; that is a mere 16 %.

P.