Frustrated telco calls for European intervention in failed broadband market

17 Sep 2008

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An Irish telecoms operator has gone over the head of ComReg and has written directly to EU information society and media regulator Vivian Reding seeking urgent action on the failure of local loop unbundling (LLU) in Ireland.

Writing to Reding, the director of regulatory affairs at Smart Telecom told the fiery EU telecoms commissioner that LLU in Ireland has been a total failure, with only 19,000 unbundled paths in the entire Irish market.

This is despite very significant investments by various licensed operators — in Smart’s case some €60m.

In a letter seen by siliconrepublic.com, Quinn wrote: “The result of the failure of LLU is a lack of choice for consumers, a lack of innovation, a lack of new investment in LLU and consequently an incumbent operator with a constant retail market share of 70pc of the retail DSL market and over 95pc of the entire DSL market in relation to retail and wholesale bitstream services (both of which are almost identical from a consumer perspective).

“Indeed the incumbent’s (Eircom) market position is so strong that last month they increased call charges and this follows just months after an increase in monthly line rental to €25.36 per month, the highest in Europe. Indeed the increase in call charges has led to some calls increasing in cost by over 89pc. This is at odds with international trends, but with such a strong position it is understandable why this was done.”

Quinn attributed the failure of LLU in Ireland to successful challenges against the regulator’s decisions by Eircom, lack of regulatory enforcement powers until 2007 and extremely high ancillary costs for LLU, particularly faults costs.

Full and partial LLU path costs, Quinn told Reding, are amongst the highest in the EU and the service is riddled by high early-line failures and a very high line fault index.

When ComReg in June suggested changes in the cost of shared LLU, Eircom’s legal challenge saw the move shelved.

Financial costs, the burden of resources and the length of time a court case would take were cited by ComReg as the reasons it wouldn’t fight an appeal by Eircom against its decision to reduce LLU wholesale prices.

“We understand the logic behind this action, but question how such a situation was allowed to arise at all.

“This regrettably brings us back to delays, uncertainty and continued failure for LLU in Ireland and is at complete odds with EU direction and policy for a new-era information society and common community objectives.

“As many other markets have moved from LLU to discussions on NGN this situation we now find ourselves in is totally unacceptable and immediate and urgent action is required, otherwise LLU will not have an opportunity to succeed and will be surpassed.”

Quinn warns that if the practices in LLU are replicated in an NGN environment in Ireland, then competition will completely fail.

He has formally asked Reding for immediate intervention at local and European level “as is mandated at the EU level for many years but has never been allowed to flourish in Ireland as it has in the UK and France.”

He has also asked Commissioner Reding for a full European and local regulatory review as to why LLU has been allowed to fail.

By John Kennedy

Editor John Kennedy is an award-winning technology journalist.

editorial@siliconrepublic.com