Eircom criticised for line rental price hike

13 Jan 2004

User groups and telecoms industry players have reacted with dismay to Eircom’s decision to raise its line rental charges for the third time in less than a year. The telecoms provider confirmed this morning that it is to increase its fees by 7.5pc to €24.18 and that it would be making an application for the price rise to ComReg today.

“I’m horrified at this decision,” said Nickey Brennan, communications manager at food processing giant Glanbia. “As an organisation that has a big investment in landlines because of the large of number of locations we have, this will have a major impact on our cost of doing business.”

He added that the price increase was “indefensible” at a time when industry had been through rough times and felt it was a clear abuse of market power. “Eircom has such a dominant position. You can buy your voice minutes from another provider but you can’t get a landline from any other than Eircom.”

He also said that the likely result of the price hike would be that larger organisations would explore or revisit the possibility of moving their business to mobile carriers given that the price differential between fixed and mobile operators was narrowing. However, this may not be an option for smaller businesses that would not have the same negotiating power as the big corporate names, he said.

Others condemned the timing of the announcement, which comes just a day after Eircom announced applications for cuts in its broadband charges. “It does seem contradictory that it is announcing a decrease on the broadband side but on the other hand it is increasing line rental changes affecting PSTN and ISDN users,” remarked Siobhan Masterson, spokeswoman for the Telecom Users Group within IBEC.

She predicted that small business would be worst hit by the price rise. “Small businesses are already struggling with enormous business costs. Now they’re having to deal with another big cost increase.”

Defending the price rise, an Eircom spokesperson said that in overall terms residential and business phone bills had fallen significantly since 1997 and were among the lowest in Europe.

He added that Ireland’s low population density was the reason why rental charges were among the highest in the EU and that the money accrued from the price increases would be reinvested in telecoms infrastructure, including broadband.

By Brian Skelly