EU concern over Irish telecoms competition

29 Mar 2007

The EU has warned that the full benefits of the single market for telecoms in Ireland is not being felt and warned that the long-delayed extra powers for ComReg “would appear to be more than necessary”. It also warned that the Appeals Panel set up by the Government is taking too long.

The 12th EU telecoms market reports shows that while much progress has been made, the full benefits of the single market in telecoms are still not being fully exploited in European countries, including Ireland.

It says that while the Irish electronic communications market saw competition intensify in the mobile sector in 2006, broadband penetration is still lamentably below the EU average.

Although the Irish broadband picture is below the European average, the EU report said the market has improved substantially, partly driven by the uptake of alternative platforms such as wireless local loop.

Across Europe the average penetration stood at 15.7pc in October, while in Ireland it stood at 10.3pc. This is still a considerable improvement on 5.3pc a year earlier.

The report also pointed to the impact of the metropolitan area network (MAN) strategy as marginal in 2006 and said the networks were a “rather expensive connectivity solution” due to the fact that the MANs are not connected nationally.

Despite ComReg continuing to tackle local loop unbundling-related problems, effective implementation of remedies in practice “remains an issue”, according to the report.

The EU report said that while ComReg has taken a number of regulatory initiatives around spectrum management and consumer protection, “the expected and long-delayed reforms of the Wireless Telegraphy Act would appear to be more than necessary”.

The EU report pointed to ComReg’s current inability to impose fines and in particular the fact that the maximum fine that can be imposed by a court upon ComReg’s request amounts to only €3,000.

The report also revealed that the Appeals Panel set up by the Department of Communications, Marine and Natural Resources to resolve issues between operators and the regulator has done its fair share to also stifle competition by creating a rigorous appeals process that scrutinises all aspects of ComReg’s regulatory decisions.

“The time taken to hear these appeals, combined with certain procedural aspects (such as an intermediate procedural step of referring disputes to the panel by the Minister) has meant the process has proved to be lengthy.”

One appeal overseen by the panel took one year to complete, the report said. A review of the use of the Appeals Panel is under way and may mean the expansion of the jurisdiction of the existing Commercial Court.

Despite efforts such as the creation of the 076 number range by ComReg and the introduction of guidelines for the treatment of consumers, the actual market uptake of voice over IP (VoIP) has been very slow.

From a mobile perspective the report found that the reason there are no mobile virtual network operators currently active in the market is due to alternative operators finding it difficult to persuade mobile operators to open their networks.

In October 2006 the mobile penetration rate in Ireland reached 110pc (on Tuesday ComReg said this is now 111pc). The report said the shares of the three largest mobile operators Vodafone, O2 and Meteor are 47pc, 35pc and 18pc respectively.

“The opening of telecom markets to competition is certainly one of the EU’s success stories as can be seen by the downward trend in tariffs and better services,” commented Viviane Reding, EU Commissioner for Telecommunications.

“However, while 2.3pc growth of the sector and 5pc additional investment are good, they are not good enough in times when Europe’s competitiveness is a stake.

“This is why this year’s reform of the EU’s telecom rules must focus regulation on those key bottlenecks where competition is still not effective. In a sector where technology transcends national borders, regulators should pave the way for pan-European economies of scale that are in the interests of both operators and consumers,” Reding added.

By John Kennedy