Esat BT says that basic wholesale rates of €27 for residential bitstream DSL broadband internet agreed between the Commission for Communications Regulation (ComReg) and Eircom may be offset by a contentious €150 connection charge.
This charge, it says, has left Esat BT and other alternative telecoms providers hesitating while they try to work out competitive pricing structures for bitstream DSL (digital subscriber line).
In early April, Eircom will be offering a consumer DSL service, following an agreement it signed with ComReg. Under the agreement, Eircom, as the dominant player in the Irish market, will allow other telecoms firms to provide similar DSL service using Eircom’s infrastructure, paying a wholesale fee of €27 per month. Independent telcos will then have to set a fee on top of this that will allow them to achieve a margin for delivering the service.
A spokesperson for Eircom confirmed to siliconrepublic.com that its bitstream DSL services will be available to the Irish market in the second week of April.
Bitstream internet access works in such a way that unlike full local loop unbundling where telcos place their own DSL equipment in an Eircom exchange, the telcos instead use Eircom’s infrastructure but provide consumers with their own branded modems and services. It also allows a voice and an ADSL service to be integrated over a traditional two-wire copper pair. Eircom is talking about offering three products on a phased basis, beginning with a 1Mbps downstream and 256Kbps product, followed by a 512Kbps downstream/128Kbps upstream product and a 512Kbps downstream and 128Kbps upstream product.
The decision to price it at a monthly wholesale rate of €27 for residential and €55 for business comes after a year of legal wrangling over a fair pricing structure. However, while telcos such as Esat BT see the monthly rate as a step forward, the costly connection charge of €150 for businesses and residential customers could complicate things.
In comparison with the UK, where wholesale rates average at €20 per month, the cost of connecting customers is zero.
As well as this, Esat BT’s product director Peter Evans told siliconrepublic.com that Esat BT will also have to pay Eircom for backhaul to its own network in 2Mbps or 34Mbps circuits at an annual cost of up to €100,000, which will ultimately be reflected in charges to consumers. “Esat BT will need to pay for the modems or ask the customers to. We will also have to pay for engineers to visit customer houses to install the service, cover marketing, staff and sales costs and hopefully make a margin out of it too.”
“Given this, it is difficult to financially justify a consumer offering at the price which we believe the market can accept as a mass offering – for example approximately €100 total set up, including modem and approximately €40 to €50 monthly, including Vat,” Evans said.
“However, we have to be mindful that we need to meet our customer needs and also maintain our market position as a consumer ISP (internet service provider) through Ireland On-Line and Oceanfree.net. This is the dilemma we and the competitive landscape in Ireland face,” Evans told siliconrepublic.com.
By John Kennedy