BT hits out at Eircom High Court action

22 Sep 2009

Another year … another court action. It’s easy to confuse 2005 with 2001, especially with regard to telecoms and local loop unbundling. Yesterday, Ireland’s second-largest telecoms infrastructure player, BT, hit out at Eircom over its latest action against ComReg.

During the summer, ComReg moved to reduce the cost of line share for alternative local loop unbundling (LLU) operators from €8.41 to €0.77 – a move that was roundly applauded by LLU players BT and Magnet.

However, for the third time, Eircom last week lodged an appeal with the High Court against ComReg’s decision to cut the LLU line share cost.

In 2005, ComReg proposed a line share price of €0.39 which was successfully challenged by Eircom.

In 2008, Eircom appealed ComReg’s direction to set line share price at €2.94, forcing ComReg to withdraw its direction.

“BT Ireland is disappointed by Eircom’s legal challenge to ComReg’s direction of a substantial price reduction for local loop unbundling,” said BT chief executive Chris Clark.

“We firmly believe that local loop unbundling has a significant part to play in the creation of competitive high-speed broadband in the Irish market. The price reduction proposed by ComReg was merely to bring Ireland in line with the rest of Europe.

“It is appalling that Eircom and its prospective new owners, STT, a sovereign wealth fund, want to keep Ireland in the broadband slow lane by stifling competition. The consumer ultimately suffers – as Eircom continues to walk backwards slowly, consumers will not enjoy the full benefits of competition and innovation,” Clark said.

LLU effectively means an operator gains access to a local exchange and by being able to put in their own equipment they can offer higher speeds and newer services, such as TV via broadband. This is different to bitstream broadband where an operator simply resells an incumbent operators’ product and cannot change or innovate with the product.

However, after more than 10 years since deregulation of the Irish telecoms market began, LLU can be seen as a market failure in this country, with 96pc of copper DSL lines sold in Ireland originating with incumbent operator Eircom either directly or as “resold” services.

Despite millions of euros invested in LLU by alternative operators Smart, Magnet and BT, only 16,500 people in this country subscribe to LLU products.

If a similar agreement to the BT/Ofcom deal were to be struck by ComReg and Eircom, the Irish market for LLU could potentially grow to 150,000 subscribers, observers say.

In the UK, more than 30 broadband providers now serve 6m people with LLU services.

By John Kennedy

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years