Telco price caps successful so far, more on the way says ComReg

30 May 2003

Eircom, Ireland’s largest telco, has complied with price cap regulations over the past three years, according to a statement from the Commission for Communications Regulation (ComReg).

The ruling follows a review of information supplied by Eircom, which showed that under the three-year price cap, relevant retail prices were reduced by 20pc in real terms.

The new cap of consumer price index (CPI) 0pc, which came into place in February, is aimed to ensure that those real gains are maintained over the next three years, ie Eircom cannot increase prices by more than the rate of inflation. “By the end of that period in 2006, we expect nominal average prices to be at approximately the same level as they were in 2000,” ComReg said in a statement.

The price cap applies to where Eircom services are dominant. These include the provision of telephone exchange lines and ISDN lines, telephone exchange line and ISDN connection and take over, local dialled calls, trunk dialled calls, operator calls, payphone calls, lower quartile bills and fixed to mobile calls.

ComReg said that price caps were imposed on Ireland’s inadequately competitive market to ensure that consumers got the benefits of price reduction which competition would otherwise provide.

ComReg added that it believes that the relaxation of the cap from CPI 8pc to CPI 0pc will stimulate competition for alternative telcos offering price-capped services, “allowing Eircom’s competitors more opportunity to compete on price than they would have under a continuing CPI 8pc cap”.

By Lisa Deeney