ComReg rules on Eircom wholesale price cap

29 Aug 2003

The Commission for Communications Regulation (ComReg) has ruled in favour of establishing a cap on the wholesale interconnection rates that Eircom charges independent telcos. The decision could be viewed as a fresh barrage in the long-running legal standoff between the regulator and Eircom over the wholesale rates that the telco charges.

ComReg and Eircom are locked in a High Court battle, with Eircom claiming that if it reduces its charges to the levels demanded by the regulator it would lose tens of million in revenues.

Having agreed in principle to implementing a conveyance rate price cap, ComReg says it is evaluating its new powers under the EU Framework Directive on Telecommunications to decide on a method of implementing a proposed price cap.

Last February ComReg issued a consultation paper on fixed interconnection charging mechanisms. After receiving eight views on the subject, the majority of which declared the present pricing arrangements for fixed interconnection rates to be unsatisfactory, ComReg agreed in principle to a conveyance rate price cap for Eircom.

In a statement last night, ComReg said that the objective of establishing a price cap was to spread the financial risk equitably between Eircom and what it describes as other licensed operators (OLOs). ComReg said that a suitable price cap would have to be established that would provide both Eircom and OLOs with incentives to invest in infrastructure and services.

The decision, ComReg said, was based on past experience of conveyance rate price caps in the UK. Fundamental to its implementation, the regulator added, were wide support across the industry and a price cap that provides for cost reduction over time.

ComReg referred to new powers under the EU Framework Directive which gives it new parameters to enforce its decision based on a process of market definition, market analysis and the identification of a firm with significant market power (SMP), a process the regulator says is already under way.

By John Kennedy