ComReg slashes LLU charges

Dangger

he 1 billion was pulled out of thin air. I'm surprised they did not say that they were cancelling a 10 billion investment. That would have had greater effect.

Of course! We'll never know how much they were going to invest.

flav0rflav

I fully agree with what Dave says.

I would also like to say that I believe it is not just an issue of Ireland being inefficient and lacking infrastructure - hence being unappealing to external investors, but it also hampers our own indigenous development.

Broadband is a new technology, awaiting applications and services. Which countries and their indigenous companies are going to develop these new services? Which countries are then going to gain economically from this? It's obviously those countries where these technologies are widely available to both ordinary people _and_ those that can develop the services. Ireland is in an eminently good position, in terms of people with the creative, technical and artistic abilities to profit from future internet/broadband development. We are of course blocked by, well, I believe, eircom doing what it should do, and the powers that be, taking no significant action.

The difference with broadband as opposed to any other other media is the interactivety. The applications are things like gaming, gambling, stock market trading, video conferencing, teleworking. Latency is an issue for interactivety. Latency to the US is due to the speed of light. Interactive applications have to be at least reasonably 'local'. The latency from any point in Ireland to any other point, with a decent broadband infrastructure, is very suitable for interactive apps/services. What this means is that we don't necessarily have to be depending on outside sources for these services, and in fact should be self contained. We should be developing these service firstly for consumers on the island, and then using that experience abroad.

This should be a means of starting a new boom in this country. We are in a recession, what will bring us out of it?

spongebob

Originally posted by Dangger
Of course! We'll never know how much they were going to invest.

Would it be fair to say that the proposed USO is/was being haggled over at the moment.....haggled big time I should hope.

(we know that Vodafone accept their SMP designation from the Interconnect Doc)

Eircom (in typical pick a big number mode) costed their USO obligation as €1Billion.....or a lot of Balloons, whichever is more expensive

Eircom have now broken off negotiations on the substance of the USO because they are in a huff with Comreg.

Thoughts

M

MDR

Eircom have now broken off negotiations on the substance of the USO because they are in a huff with Comreg.

Eircom where never likely to take the USO lying down in fairness, it seems as though they are prepared to invest alot of their time and energy in resisting USO or any other attempt to regulate them.

They are very aware of their own effect on the Irish Market, they are also very aware what their responsiblities to the consumer would be under a better regulated regieme, they have no desire to loose their dominant position in the Irish Market.

This is a typical of the Irish condition in general, one player dicating the market, Mary O'Rouke and Etain Doyle jumping at their smallest request and believing everything they are told. They must have been rubbing their hands with glee.

Now they are worried, they are backed in to a corner, they have a new COMREG on one side and Dermot Ahern on the other, and Minister Ahern is mad as hell and doesn't believe a word they tell him. They intend to come out fighting, a smarter business would go with the flow, bend with the wind, as BT and Deutshe Telekom did, I don't think Eircom will ....

This is gonna end up being settled in court one or another me thinks. This isn't merely about the USO, although the responsiblities Eircom would be forced to accept under the USO are substancial, this is about Eircom retaining the right to dictate the market.

Sure its all about killer applications, no-one is interested in broadband ...... no its all about the money and unions that have to be kept happy, Eircom reform .... are you kidding .... not with CWU still owning 30% they won't (or do they ... Muck ?).

SkepticOne

Originally posted by Muck
Eircom have now broken off negotiations on the substance of the USO because they are in a huff with Comreg.

Thoughts

Whatever money Eircom need to spend to get their network up to a vaguely acceptable standard for citizens should not be classed as "investment" if Eircom are required to do it under the USO obligation. We are required to pay tax but we don't regard this as "investment".

If, by the "1 billion investment" Eircom mean their USO obligation then they are acting like the Queen of England who gets to negotiate the amount of tax paid every year.

spongebob

They have already found the money they need. They got an extra €3.20 a month rental or so (ex vat) per line (1.4m) per month, from Comreg.

3.2x1.4x12 = €54Million a year and the USO in Ireland last 4 years ....typically

Thats €200m sorted anyway which is entirely for Network maintenance ....allegedly.

Another €200m a year is always provisioned for as standard in the replacement of clapped out Network and some enhancements so that people can make calls over it.

Thats €800m over 4 years

Theres your €1Billion investment.

1. They have decided to hand back the 2 line rental increases because they wont need them .

2. They will let their kit wheeze and splutter till it dies. Then they will turn it off and save electricity too.

M

Dangger

They will let their kit wheeze and splutter till it dies.

Keeping in the same vein as MDR's "it's all about the money", surely they cannot let the network splutter and die as it will have no value and make it difficult to attract a purchaser when the Valentia consortium divest themselves of this golden goose.

No one would be stupid enough to buy a utility company in Ireland without closely examining the the infrastructure after the NTL debacle (paying all that money for a crap network).

MDR

I would tend to agree with Dave, they will mantain a minimal amount of investment in the network, they won't let it die but certainily won't stretch to removing splitters or investing in broadband. They like the status quo, it suits them very well, they are quite content to let it continue and hence are resisting change.

This company has no long-term vision, because there really is no long term, Valentia will unload Eircom in the medium term, so they will do the bare minium between now and then to keep it on its feet, and certainily do their best to milk the assets in the interim.

SkepticOne

I think Eircom realise that nobody want to buy an oxidising copper network these days hence their attempt to con investers into bonds based on future metered revenue. It looks like milking the network until it becomes irrelevant is their chosen strategy.

flav0rflav

I would say they are quite happy to maintain the network. They are putting in fibre and dslams.

They know the current situation can't last forever. They understand that it is in their interest to delay as much as possible.

MDR

I would say they are quite happy to maintain the network. They are putting in fibre and dslams.

sorry I may have missed your point, could you clarify.

flav0rflav

I think my comments were probably unnecessary, just repeating what you said:

Originally posted by MDR
I would tend to agree with Dave, they will mantain a minimal amount of investment in the network, they won't let it die but certainily won't stretch to removing splitters or investing in broadband. They like the status quo, it suits them very well, they are quite content to let it continue and hence are resisting change.

Just one or two people seem to see them as stupid, which is not the case. They are making money.

SkepticOne

More on the LLU price reduction in the SBPost here.

SkepticOne

Where I think people (not here) go wrong with Eircom is that they see Eircom as wanting to invest in broadband and new technologies. Of course their purpose is simply to make money and get a return on their investment in the network. This may in some circumstances involve investing in new technologies if they feel they are under some competitive or regulatory threat.

Most of Eircom's rhetoric seems to revolve around needing funds to invest in broadband therefore, e.g. line rentals need to be raised etc. In fact, this takes some pressure off the need to do broadband since they are now getting more of a return on their existing investment.

If you wanted to encourage Eircom to invest in broadband, then you would halve line rental and lower call charges across the board on old technology. They would then invest in broadband as a means of making more money.

Cork

If you wanted to encourage Eircom to invest in broadband, then you would halve line rental and lower call charges across the board on old technology. They would then invest in broadband as a means of making more money. [/B]

Yes, You increasing the cost of renting old copper wire is crazy. It should be be made more attractive for people to switch.

This has got to be making Broadband more affordable.

Air Travel was once seen as a luxery out of this country before Ryanair.

Eircom is like the Aer Lingus of yore.

pete

Umm i don't see this posted anywhere, so...

http://www.rte.ie/news/2003/0604/eircom.html

Eircom wins stay on Comreg decision

June 4, 2003

(17:14) Eircom has been granted a stay on a decision last week by the telecommunications regulator, ComReg, to impose a flat fee for access by competitors to its fixed domestic lines.

Eircom had complained the fee set by ComReg would mean an annual loss of €3million for the company and would hinder its ability to invest in its network.

ComReg's decision will now be challenged by Eircom in the High Court on 23 June.

If Eircom fails, it has undertaken to reimburse competitors who would have benefitted from the new charge which was to have been introduced this week.

corkie

ComReg said it was disappointed at Eircom's challenge, as the consequent delay would have 'significant implications' for competitors and for competition in the broadband sector.

The regulator said it would 'vigorously contest' the proceedings and defend the integrity of its procedures.

Available from http://www.onbusiness.ie/2003/0604/eircom.html

Typical Eircom, we have come to expect fighting it out to the very last! If Eircom did not spend so much on advertising and court battle's, They cut a chunk out of that annual loss of €3m.

But If they weren't advertising as much, TV licences would probaly be lot more expensive.

Offtel: International benchmarking study of Internet access (dial-up and broadband) - 4 June 2003

Summary on theregister under a title of:
The UK continues to be a Local Loop Unbundling (LLU) laggard, according to the latest research from Oftel.


Oftel Report in HTML or
PDF Format

Annexes are available as a pdf document to download only - please click here
Annex A: Exchange rates and VAT rates
Annex B: Detailed results for Internet access baskets (basic)
Annex C: Detailed results for DSL and cable modem services
Annex Glossary

Above provide so you bring your calculations up to date.
After I have scan it /read it I might return give quotes or comments.

MDR

What we have to bear in mind at all times is that Eircom is making a huge loss because of the loan repayements it is required to pay. At this point we can gaurentee that any action that COMREG takes to give Eircom more money will be slammed as still not being enough to allow them to continue investing in the network, and any action they take to curb the (outragous) prices Eircom charges will end up in court.

Eircom I am sorry to say has gone beyond the realms of mere corporate Ireland. Usually Irish company have little or no interest in their customers, Eircom is taking this to a whole new. It is all about the money, Eircom principle business is making money, well that makes no different than any other company.

What I am driving at is, that Eircom is not interested in any long term initatives unless they are government funded. They will not invest to make a return later, they have no interest investing the Ireland of the future, they are going to provide as little service for the most return possible for as long as possible, and if COMREG gets in the way, COMREG had better watch out! Milk the assets until the network becomes irrelvant to quote ScepticOne.

Cork

I am not surprised with the atitude of Eircom.

They are not exactly the Ryanair of the Telecoms Market.

ednwireland

off the point a bit but sh*t service crappy old aircraft (lines) ridiculous prices, gob****e chief executive i see some similiarity between ryanair and eircom (apart from ryanairs profit margin and €1bn in the bank)
sorry just tried to book a flight to the south of france ryanair was the most expensive option at €811 for 2 people so much for cheap air travel, i suggest you refrain from using ryanair as an example cos they only provide cheap tickets on certain competitive routes a bit like eircom (international fibre links are pretty cheap).

MDR

I fly ryanair or easyjet at least every other every other week,
and within the UK and Ireland. Find them to be consistantily the cheapest and always on time ... but there you go, all very OT .

corkie

From onbusiness @ rte

Eircom has criticised an advisor to ComReg for commenting on a legal action between the two organisations prior to the outcome in court.

Professor Bill Melody told today's Irish Times that Eircom was acting against the national interest by challenging a ComReg ruling that it must cut the price it charges rivals for accessing its local network.

Melody arbitrated between ComReg and Eircom on the issue.

Eircom also says Melody's claim that competition has been slower to develop in Ireland is inaccurate and damaging.

I believe his comments that competition has been slower is very accurate.

Damaging?????to Eircom

---

Yes when the public wake up to how much there dragging this country back.

nahdoic

eircom is damaging to eircom.

The Brigadier

Who is this Bill Melody guy???

Where is he....

Dangger

Bio available here. He assisted ComReg in the price modelling of Eircom's network over the past few months that eventually decided that the LLU price should not be the €27 that Eircom wanted but around €14.

He has pulled no punches in comments of late stating that Eircom's inefficiencies should not be imposed on the consumer or to hinder competition. Other incumbants that were purchased in other countries were bought with the understanding that they would have to be steamlined and shaped into efficient operators to lead. In Ireland however a group of non-governmentdirectors and shareholders are threatening Ireland's competitiveness in a way many have yet to comprehend, because they think they can.

Bill Melody is the Vodacom Visiting Professor at the LINK Centre, Witwatersrand University. He is also Visiting Professor at the Media@lse Programme, London School of Economics, and at the Centre for Tele-Information, Technical University of Denmark. He is Managing Director of LIRNE.NET and the World Dialogue on Regulation for Network Economies (WDR) Programme, and is Editor, Policy Forum section, info.

Bill Melody has helped to originate and reform telecommunications policies in many countries, from the US and Australia to the developing world.

Previously Professor Melody has held appointments at the Delft University of Technology, Netherlands; Centre for International Research on Communication and Information Technologies (CIRCIT), Melbourne, Australia; St. Antony’s College, Oxford, UK; Simon Fraser University, Canada; the University of Pennsylvania and Iowa State University, US. He participated in the earliest stages of telecom reform and computer/communication convergence as Senior and Chief Economist, FCC, 1966–71, and as special advisor to the US Government in the breakup of AT&T, 1974 –84. He has contributed to telecom reform programmes around the world, and the establishment of new education and training programs in the ICT field in many countries. He has been Founding Director of university-based centres and programs in five countries, and advisor in several others. He is editor (1997) Telecom Reform: Principles, Policies and Regulatory Practices, used in training programs and university courses in more than 100 countries; and was editor, Telecommunications Policy from 1999–2001.

But what are teh chances that Sir Anthony and the rest of the crew will pour their own money into taking on the Irish government in their own courts?

June 24th is D-Day for the development of Irish telecommunications. The fall out either way will be huge. If the ruling stands, the liklihood of real competition becomes real with a company such as EsatBT finding themselves in a position to buy access to as many lines as they want (a change from the 1,000 or so they currently have). AOL, MSN, Freeserve can pop along and join the party.

Eircom no doubt will sulk and scream and wail and huge job cuts will follow with Eircom being forced to admit it is inefficient. Eircom will attempt to have anger focused towards the government for *forcing such huge job losses *, until people realise that Eircom's management has shown scant regard for the long term all along and their history of foot dragging meant this was inevitable. There have also been redundancy pacakges available for some time within Eircom.

If Eircom win, there will be no single greater indicator that Ireland's telecoms regulatory regieme has utterly failed. ComReg's position will be questionable, as although they made a decision after prolonged and complex investigation into Eircom's practices, they would have been unable to implement it, despite the Minister for Communication's desire that advances are made in this area.

A privatley owned company will have trashed Ireland's competiveness even further and pretty much single handedly banished the the e-enablement of this country and the benefits that come with that to the bin. Add to this possibility the liklihood of some big players such as Dell (who are already emitting warning signs) or Microsoft pulling out, Ireland get's what many of us expected. Left behind eating the dirt of those countries who understood the opportunities and were able to act to bring them into reality.

MDR

until people realise that Eircom's management has shown scant regard for the long term all along and their history of foot dragging meant this was inevitable.

Dave,

I amn't sure people are that smart, so I sortof worry that the potential backlash from Eircom staff lobbing their local tds would be quite pronounced, I am sure the CMU will, if they already have not already done so, formulate a battle plan for this eventuality.

there will be no single greater indicator that Ireland's telecoms regulatory regieme has utterly failed.

I would necessarily go that far, I have judges fly in the face of reality on more than one occasion, I wouldn't rule out the judges having a couple of nephews at Eircom etc. The Irish judisical system IMHO is something to be very wary of ....

But what are teh chances that Sir Anthony and the rest of the crew will pour their own money into taking on the Irish government in their own courts?

Depends on the money as I have said before, if the money they will earn by stopping or delaying the LLU price drop is more than the potential legal costs of such a fight, damn sure they will. They are looking to teach COMREG a lesson, beat it into submission ... they will fight, and this is only the start.

Did anyone catch the sbpost opinion article on the whole situation.