€200 – price for Irish telecoms competitors to access local loop

28 Jan 2009

The price of a telecoms competitor to access the local loop of incumbent operator Eircom works out at €200 per customer based on a two year subscription, compared with €100 in the Netherlands, according to the latest ECTA league table.

ECTA (European Competitive Telecommunications Association) today published a report that said the highest levels of investment in telecoms occurs in countries where the national telecoms authority or regulator has strong powers and is not afraid to use them.

The report, which looked at 20 countries in Europe, ranked Ireland in sixth place in terms of its scorecard.

The UK led the table with a score of 373, followed by the Netherlands with 362 points, Norway with 360 points, Denmark with 344 points, France with 322 points and Ireland with 302 points.

Poland and Turkey were at the bottom of the league with 180 and 140 points respectively.

Of particular concern to ECTA is that different approaches are being taken in different countries on the regulation of ‘next-generation’ fibre access networks, ranging from explicit restrictions on access in Spain to measures to ‘unbundle’ fibre to allow more choice for consumers in the Netherlands.

Inconsistent availability of essential high-speed business connections makes linking together European multinational corporations very difficult. Regulators’ powers to enforce competition rules also vary widely, with some national regulators lacking even basic powers to fine dominant firms for breach of their obligations. 

ECTA urged the European Parliament and Council to use the opportunity of the Review of the Telecoms Framework to send a clear signal supporting the need for consistent and effective regulation to address dominance in the telecoms sector and to fully empower national regulators.

Recent figures from the European Commission and investor reports show that competition in the broadband market has stalled.

For the past two years, incumbents have maintained, on average, around a 50pc share of the market. Some dominant firms, such as Telefonica in Spain, have increased their market share from 51.5pc to 57pc while reporting strong financial results. At the same time, investment has slowed.

“Now, more than ever, politicians need to help consumers and businesses through the economic crisis by stimulating investment and innovation by all players, lowering costs and boosting business productivity,” explained Innocenzo Genna, chairman of ECTA.

“The results of the Regulatory Scorecard have repeatedly shown that relaxing rules on dominant telecoms firms is not the way to deliver any of these objectives.”

Genna highlighted that the risks for new entrants in the telecoms market are particularly high in today’s climate, and that there is scope for regulatory effectiveness to decrease in future years if national regulators do not act to maintain competition. “Incumbents in several countries, including Germany and Italy, are bidding to increase local access charges for competitors.

At the same time, entrants face the prospect of their previous investments being stranded as incumbents close down the local exchanges where entrants’ networks are housed. “In the past, we have generally seen year-on-year improvements in competitiveness in the Scorecard, but this may change.”

Genna continued: “The most valuable contribution that telecoms policymakers can make towards Europe’s progress is to provide certainty for the whole market by focusing on the goal of at least one fibre ‘superhighway’ to each home that is effectively regulated with terms that allow a fair return, but do not discriminate in incumbents’ favour. Policymakers should also ensure that the European Commission and national regulators work more closely together to translate words into consistent action.”

The report found that the time to port a telephone number ranges from one day in Germany and Ireland to more than 45 days in Poland. 

The price for a competitor to access the ‘local loop’ of a dominant firm ranged from approx €100 annually in the Netherlands to approximately €200 in Ireland, based on a two year subscription.

The price for a basket of services for a ‘low user’ of mobile ranged from €7 in Sweden to €24 in the UK.

Some national regulators have no power to fine dominant firms directly, while others can apply penalties of up to 10pc of turnover.

By John Kennedy