"Eircom's ComReg challenge criticised"

Delphi91

Article from todays Irish Times:

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Eircom's ComReg challenge criticised
by Jamie Smyth


Eircom is acting contrary to the national interest by challenging the Commission for Communications Regulation's (ComReg) ruling that it must cut the price it charges rivals to use its local access network.

Professor Bill Melody, a former chief economist at the US Federal Communications Commission and an expert in telecommunications, said enabling rivals to use Eircom's access network was crucial to competitiveness.

In addition a successful challenge may also force ComReg to break European law, according to Professor Melody who arbitrated between Eircom and the Commission for Communications Regulation (ComReg) on the issue.

"This is a battle which decides whether the next step in telecoms liberalisation goes forward or is stalled," he said. "Simply resisting all this change isn't helping Ireland or Eircom," he added.

Eircom went to the High Court this week to put a stay on the ruling pending a full legal challenge.

Prof. Melody, who chaired an industry group on the controversial "local loop unbundling" - opening an incumbent operator's local network to competition - said the Irish telecoms market was not yet competitive.

"Compared to the leading countries of Europe, such as those in Scandanavia, and the UK, competition has been slower to develop in Ireland because of the late start in liberalistaion."

The slow roll out of broadband and higher prices for telecoms was hurting inward investment by certain types of foreign firms, according to Prof. Melody.

"If I want to establish a Europe-wide information service and get direct access to customers, I wouldn't invest in Ireland, rather I would go to Sweden or Denmark because customers pay too high a price and get a poor service here"

He said it was completely unrealistic for Eircom to think that by fighting the decision to cut the cost for rivals to use the local access network they could stop the entire liberalisation process.

Prof. Melody said that Eircoms threat to delay a $1 billion investment on the basis of a single regulatory decision was "pretty incredible". Local loop unbundling is just one step in the liberalisation process, he added.

But Prof. Melody said ComReg's pricing decision on "local loop unbundling" would set a precedent for future regulation in the telecoms market.

He said a successful challenge to the decision by Eircom could force ComReg to be in breach of European law on the issue.

The European Union has insisted that all member-states use a current cost method for setting these access prices, wheras a lot of incumbents want to use historical costs, said Prof. Melody.

Using historical costs to set prices would pass on inefficient costs to businesses.

Professor Melody said there was no future in Eircom's opposition to liberalisation and the firm should allow other other incumbent operators in attempting to boost its wholesale business.

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Gotta say there are some fairly cutting criticisms against Eircom in that article..if only they'd listen and cop themselves on!!

Mike

Chowley

I bloody love that article you brightened up my morning.:D

I hate those bastards!!!!!!!:mad:

:ninja:

corkie

On the other IOFFL board: Eircom response!

Delphi91

Originally posted by Chowley
I bloody love that article you brightened up my morning.:D

Yeah, I loved it when I read it too!!..:D

Anyway, to illustrate the joke of the challenge, here's another article which was on the same page of Fridays Irish Times:

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Alto backs ruling on Eircom cuts

Alto, the organisation representing independent telecoms companies, yesterday said that it backed industry regulator ComReg's decision to cut the rate that Eircom charges its competitors for using local access network.

(Here's the best bit...:D) Alto estimated that the decision would cost Eircom only €1,000 a month. Spokesman Mr. Iarla Flynn added: "The legal fees for one day of Eircom's court case [challenging ComReg's decision] would cost them a great deal more."

The local access network is made up of the lines linking customers to telephone exchanges.

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I've got to say that the image of a spoilt child not willing to share its toys springs to mind here!!!

Mike

Chowley

LMAO they are complete assholes.They can stick that up their ass and lower it more in my opinion.Its just a token gesture.

gandalf

Heres the Sunday Business Posts angle on this.

Expert's report to ComReg slates Eircom's `inefficiency'

08/06/03 00:00

By Ted Harding, Gavin Daly and Michael Murray

International telecoms expert Bill Melody has lashed Eircom in a confidential report to regulator ComReg, saying Ireland could not ``be held hostage'' by the telco's ``inherited inefficiencies'', The Sunday Business Post can reveal.


In his report completed earlier this year, Melody dismissed Eircom's claims that unique circumstances in Ireland created major obstacles to reform of the market. The company had suggested its hands were tied on the issue of cutting staff to achieve an efficient level of operations. In a deeply embarrassing finding, Melody said the telco should not be compensated for its bloated workforce and poor network. He wrote that regulation ``cannot'' be changed to suit Eircom.

The former chief economist with the US Federal Communications Commission chaired an industry group,whose function was to determine Eircom's cost base.

Melody wrote: ``Eircom's inefficient legacy costs must be excluded from consideration''.

Melody said Eircom's ``high level of inherited inefficiency'' meant it could earn greater than normal profits from productivity improvements. ``The greater the inefficiency, the more scope there is for productivity improvement.''

The work of the Melody committee eventually led ComReg to set an access fee of e14.67 per month for which Eircom's rivals will be able to access the vital last mile of its telecoms network. The fee is about half that sought by Eircom. Currently, it is challenging the decision by way of a judicial review in the High Court.

Speaking to The Sunday Business Post, Melody said the public should not suffer if Eircom's buyers ``didn't do their due diligence. They have problems with the labour force and have too many people,'' he said of Eircom.

Melody said Eircom was ``still acting from a monopoly market perspective'' and had not learned from the experiences of other countries.

``If indeed their costs are as high as they say they are, then they simply have to get costs down. As a monopoly, they could adjust their prices to meet costs, but as a competitor they have to adjust costs to the market price.''

``The problem they've got to deal with is real economics. Eircom hasn't learned that lesson yet. Some operators with their backs to the wall have tried to maintain their monopolies. Others have taken a progressive view and positioned themselves for the future to take one part of a growing market,'' Melody said.

``In other countries the issues have been very clear,'' he said in his report. ``When the incumbent was privatised, the purchaser got the company as it was,warts and all.''

``The most successful incumbent operators are those who managed the reduction in their workforces and the improvement of their networks most effectively.There is a lack of clarity, agreement and common understanding about what is efficient and inefficient in Eircom's operations and how that translates into cost analysis.''

Eircom has rejected allegations that it is an inefficient operator. But the company has also been attacked by Alto, the industry group representing new entrant telcos.

``Eircom have not tackled its cost base and is trying to penalise consumers and other operators by passing on those costs in the form of higher prices. We think the recent increase in line rental is a very good example of this,'' said Iarla Flynn, Alto chairman.

``If Eircom is allowed have its way, consumers are going to be faced by ever-increasing pr ices and ever-reducing choice as other operators walk away from the Irish market and invest elsewhere.''

Separately, Eircom has claimed ComReg's recent ruling that the telco must reduce the monthly price it charges rivals to use its local access network could cost it e50 million.This has been rejected by competitor EsatBT as a gross exaggeration.

The claim would only be supportable if EsatBT or another competitors were renting all of the 1.6 million lines owned by Eircom around the country. EsatBT has access to less than 1,000 of those lines.

Eircom's competitors only have a10per cent market share. There is very little prospect of them reaching the level of market penetration implicit in the e50 million figure claimed by Eircom last week. Currently the cost to Eircom of ComReg's ruling is about e12,400 per annum.

andrew163

*hits head off table repeatedly*

if we had marshall law, eircom's behaviour would be counted as treason.

Delphi91

Any chance we can make Prof Melody an honorary member of Ireland Offline???

Maybe even institute an annual award for services rendered and make him the first recipient!

Mike

SkepticOne

What I'd be interested in is what exactly ComReg are planning to do now that their eminent advisor has told them that Eircom is a monopolistic bloated inefficient telephone incumbent. Are they going to do nothing and let Eircom pass on their inefficiencies to the consumer who has no choice but to use eircom's services or some service based on eircom wholesale?

Chowley

Well now that they have done something positive they will now sit around for ten years and come up with another small idea.