Mobile-only no substitute for fixed services

15 Jun 2005

Because mobile pricing is 10 times that of fixed line calls means mobile-only is not an adequate substitute for fixed line despite recent research indicating 24pc of Irish homes are now mobile-only, the Association of Licensed Telecoms Operators (ALTO) has warned the Commission for Communications Regulation.

ALTO was responding to a question in a recent ComReg consultation process on the future of telecoms in Ireland on whether substitution (opting for mobile over fixed line services) and convergence between fixed and mobile services reduces or eliminates the need for retail controls on a dominant operator.

According to ALTO it is to be expected that convergence will see some existing mobile service providers supplying services that are currently regarded as fixed and fixed service providers providing mobile services. ALTO said it is likely that these will be bundled and branded together so that single providers can meet all the communications needs of customers.

ALTO said it is also to be expected that technology developments will bring services that don’t quite fit into the traditional model for either fixed or mobile. “The delivery of video content over broadband and delivery of broadband over cable TV networks will further blur the distinctions that exist in the sector.”

Pointing to the recent ComReg Trends Report that suggested that 24pc of Irish homes now opt to substitute mobile instead of having fixed line installed, ALTO warned that this is a short term fix and does not necessarily that they can become substitutes for each other.

“Mobile pricing tends to be approximately 10 times that for service provided over fixed lines, and fixed lines can not offer mobility – a key attribute of mobile services.

“As a consequence the products may not become fully substitutable for each other, and convergence will not create a situation where regulatory obligations can be removed in the short term. This situation needs analysis as the trend continues in the marketplace. ComReg should continue to develop its consumer surveys in respect of this trend,” ALTO said in its submission.

In an interview with the new head of ALTO Tom Hickey said that the trend towards mobile-only and ultimately more expensive calls is being driven by the fact that line rental costs charged by the incumbent in Ireland are among the highest in Europe.

As a result of consumers moving to avoid line rental of almost €25 a month they are moving into a trap of paying 10 times higher for their call costs on mobile, Hickey explains.

“People may only make a few calls on their fixed line phone but end up paying upwards of €40 or €50 a month. Eircom’s revenues are going down but their line rental is going up and this appears to be a means of compensating for falling costs of calls. There is no line rental competition in Ireland right now, even through wholesale line rental,” Hickey warns.

By John Kennedy