ComReg will unveil new ‘last mile’ price in April


10 Feb 2004

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ComReg chairman John Doherty said his agency will unveil a new, amended wholesale line rental price in April aimed at speeding up local loop unbundling that would be close to the €14.67 monthly rate that sparked a long-running High Court action with Eircom last year. If Eircom is unhappy with the new price it could start another battle and curtail competition in Ireland’s telecommunications sector.

The decision by the Commission for Communications Regulation (ComReg) to force Eircom to reduce its wholesale line rental charge for the last mile to allow rival operators onto Eircom’s access network earlier last year resulted in a bitter legal dispute in the High Court between ComReg and the incumbent operator.

In June last year, a settlement was reached whereby Eircom rivals such as Esat BT and Smart Telecom would pay an interim €16.81 per month to rent a line on the last mile of Eircom’s local telecoms network, rather than the €14.67 monthly charge directed by ComReg an earlier ruling, until a review process had been carried out.

In an interview with siliconrepublic.com, ComReg chairman John Doherty said that the new figure his agency will offer would not be too far away from that figure in April.

He said: “In Ireland the competition is predominantly service based rather than infrastructure based, unlike other countries where there are competing infrastructures like cable. The last time we went to court it was €14.67 we were looking for. We will be working up from the price we want and something that suits Eircom. We want to introduce a reasonable valuation. We originally went to court for €14.67, I don’t think we will be very far away from that figure in April when we go back again.”

The rate at which rivals access Eircom’s network is crucial to promoting competition in the market and enabling Eircom to recover its costs and make a profit. However, it is on this latter point that Eircom’s decision to accept the future rate set by ComReg will hinge. If Eircom rejects the new price set by ComReg it would mean that local loop unbundling and competition in the Irish telecoms market would be further curtailed. It is understood that only some 1,400 local lines have been unbundled.

The fact that Eircom managed to bring the communications regulator to court prompted severe criticism by rival operators as to the actual powers the regulator has to punish operators operating outside the remit of their licenses.

Under the 2001 Communications Bill, ComReg in theory should have the power to fine errant operators 10pc of their bottom line. In reality it can only fine them €3,000, a drop in the ocean of most telcos’ wads of cash.

In an interview with siliconrepublic, John Doherty acknowledged the situation. “We are on record as saying we don’t believe that the enforcement powers we have are a sufficient deterrent. The Minister [Ahern] is looking into the problem. The reality is that at this point we would need to go to court and would have to ask the court to adjudicate on what the penalty might be at this stage. We don’t have that power.

“The more worrying thing is time. Here we are in a very dynamic industry where speed is the essence. In some cases for an incumbent, delay in itself has value. If they can delay a process for a year, that has significant intrinsic value even if at the end of it they conceded or lost the case. The fact that they’d been able to delay it or prevent other operators to take advantage from X or Y has its own rewards. What we are looking at is the propensity to have an enforcement and penalty regime commensurate with penalties that are immediate for the offenses. We need to get the speed to achieve the results. It should be quick,” Doherty concluded.

By John Kennedy

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