Eircom ‘ripping off’ telcos on broadband

16 Oct 2003

Eircom’s new partial private circuits (PPC) service, a wholesale leased-line broadband service for alternative licensed telcos, has resulted in an actual increases in the cost of providing broadband, with price increases of up to 50pc in some cases, claims the Alternative Licensed Telcos Organisation (ALTO).

The group has criticised the Commission for Communications Regulation (ComReg) for failing to manage the service’s introduction, considered one of the last hurdles for broadband in Ireland.

According to ALTO, PPC is a wholesale service from Eircon that are similar to leased lines and which should allow other operators to provide nationwide broadband services to businesses at a significantly improved price.

Eircom currently supplies 21,000 leased lines directly round the country with a further 9,000 leased lines supplied by other operators on Eircom’s network. This business is worth about €125m to Eircom each year.

The introduction of PPCs was first proposed by ComReg in July 2001 as a key enabler of broadband competition and a launch deadline was set for last December. However, nine months later Eircom has introduced a service that ALTO claims actually increases wholesale prices to operators.

PPCs have been introduced throughout the EU and have led to significant savings in the cost of broadband services. For example in the UK operators have seen reductions of 40pc. Consumers there, ALTO says, have benefited directly from these reductions.

Iarla Flynn, chairman of ALTO, says: “Similar reductions could be expected in the Irish market with the introduction of a realistic service. However, what has been offered to operators completely fails to meet market requirements. The prices for the service, which were only released by Eircom to operators in recent weeks, show significant increases in many cases and only marginal savings in others. How can any company be expected to make use of this service when it will actually increase their costs of doing business?”

According to Flynn the pricing for broadband circuits outside Dublin is particularly unattractive. A broadband circuit, he says, from Dublin to Shannon shows a price increase by up to 50pc.

He said that last year ComReg called for the introduction of PPCs in the belief that they would “stimulate a competitive market, provide for effective competition, encourage economic efficiency and provide benefit to end users”. The service on offer from Eircom meets none of these objectives, Flynn says.

“In response to strong encouragement from ComReg and looking at the huge savings gained in other countries operators have spent the last 12 months working on getting this new service launched.

“However, this has been a total waste of effort and once again it is the consumer who loses out. We have to ask what ComReg have been doing for the last 12 months. The outcome of this process raises serious questions for the competitiveness of Ireland’s communications sector. We are seeking a meeting with the Minister for Communications, Marine and Natural Resources, Dermot Ahern TD, to highlight these issues,” Flynn concluded.

By John Kennedy