Fate of Irish broadband market lies with OAOs

16 Oct 2007

The Commission for Communications Regulation (ComReg) is currently considering whether a functional separation of Eircom into a retail and wholesale division or a structural split into two separate companies is the best option for the country, chairman Mike Byrne told siliconrepublic.com.

Byrne also said that incumbent operator Eircom has broadly delivered on its local loop unbundling (LLU) obligations by making intra and inter-migration available and it is now up to other authorised operators (OAOs) to take advantage of the opportunity.

Yesterday, ComReg unveiled its strategy plan for the next three years, under which the company will publish Eircom’s performance targets as the universal service operator (USO) in terms of unbundled lines and quality of service.

It also said that it will begin a two-way dialogue with the telecoms industry to facilitate the framework that is in place to enable a timely transition to next-generation networks (NGNs) to drive competition in the marketplace.

Speaking with siliconrepublic.com, Byrne said that fair and predictable local LLU has been a key enabler of innovation and a driver for competition across Europe. “There is no reason to believe that this should not be the case in Ireland.

“Eircom has a regulatory obligation to provide fair and predictable LLU and, to be fair, much progress has been made to achieve this in the past six months.

“When I became chairman of ComReg I made it clear to the new owners that they were to fully deliver on LLU or we would have no choice but to go back to the courts.

“We can now say that the deliverables agreed by all parties have to a large degree been delivered on. It is now up to existing players to start delivering through inter and intra-migration for their customers.

“In the past Eircom had failed to deliver on LLU but now they have. For OAOs the product is there now and it needs to be used. To ensure that it goes well we are going to monitor progress and performance of the processes for unbundling over the next few months.

“Eircom have a regulatory obligation to deliver on LLU, it is not discretionary. BT have unbundled exchanges and Smart is using them too. We want to see more of that.

“My principal point is that there’s no reason to believe that LLU can’t be successful in Ireland when it has been in other EU states. It’s good for innovation and it’s good for competition.”

Byrne confirmed that Eircom has approached ComReg and the Department of Communications, Energy and Natural Resources regarding a possible split of the company into a wholesale and retail division.

He said, however, he is examining an option that rather than seeing Eircom split into two separate structures, between infrastructure and retail, there could be a functional separation and the company remain whole.

“As a private enterprise Eircom has a right to look at separating its infrastructure and divisions. However, ComReg intends to consider the implications of this before adopting any view.

“The clear signal from the European Union and from communications commissioner Vivian Reding is that functional separation would be a ‘last resort’ remedy for regulators in the next round of European telecoms regulation,” Byrne said, citing the functional separation of BT in the UK which the company volunteered to do.

Earlier this year, new legislation gave ComReg extra powers to fine operators up to 10pc of turnover if they failed to meet their regulatory obligations, but Byrne said these powers shouldn’t be taken for granted.

“We will look at using these powers only where appropriate in a regulatory context. It’s not a question of heavy or light touch regulation but right touch.

“We need to ensure that any interventions we make are correct. The next few years in the telecoms industry will be characterised by convergence. There is no doubt that the next round of reforms in telecoms will reaffirm the need for effective competition. Reding is on record that national regulators will need to be equipped with remedies.

“One of these is remedies might be functional separation that a regulator can enforce as a last resort,” Byrne said.

By John Kennedy