Fresh calls to separate Eircom wholesale from retail

5 Sep 2007

The introduction of functional separation of retail and wholesale telecoms services in the UK last year had the effect of quadrupling the number of unbundled lines and led to an explosion in triple play services. The same could happen here in Ireland, according to the Association of Licensed Telecoms Operators (ALTO).

New research from the European Competitive Telecommunications Association (ECTA) revealed that broadband penetration in the EU has reached an all-time high and has drawn parallels with the US and Japan.

Growth at 16pc is the result of increased competition from new entrant telecoms providers using local loop unbundling (LLU), cable and alternative technologies.

Eight EU countries have broadband penetration levels above 20pc and Northern Europe leads the table with the Netherlands having the highest penetration at 33pc, followed by Denmark, Finland and Sweden.

Average penetration in the EU-15 countries stands at 19.9pc ahead of the average penetration of 19.6pc in the US and just behind the 20.2pc average in Japan.

Ireland, despite considerable gains that saw the country leap from less than 30,000 broadband connections three years ago to 651,000 today, is second last on the EU-15 list, ahead of only Greece, and still below the EU-15 average with 14pc penetration.

“Europe’s broadband leaders have shown that unbundling is very positive for consumers and is an efficient way to otherwise encourage competition by allowing competitors to share the last mile, which otherwise is usually prohibitively expensive to duplicate,” said Innocenzo Genna, chairman of ECTA.

He said that European governments should use the opportunity of the Review of the EU Telecoms Framework later this year to boost the power of regulators to ensure measures like unbundling are enforced effectively and in a future-proof way.

Some 17 out of 25 countries studied by ECTA still have very low levels of unbundling.

Functional separation has been successfully introduced in the UK, is progressing in New Zealand and is actively being considered in Italy and Sweden.

The new chairman of ALTO Liam O’Halloran, who led Magnet’s fibre-to-the-home strategy, issued a fresh call for the separation of Eircom’s retail and wholesale arms.

“Anyone who thinks we’ve turned the corner on broadband uptake because we are seeing increases of 38pc in the past six months is living in a fool’s paradise,” O’Halloran stormed. “We are not moving up the table, but more importantly, the gap between Ireland and the countries at the top of the table continues and shows no signs of closing.”

He pointed out that seperating the infrastructure network from Eircom’s sales arm has the potential to open up the market.

“This is a basic principle of competition – the manufacturer cannot also be the distributor, the wholesaler should not be the retailer,” he said. “If these two were separated it would be in the interests of the infrastructure arm to sell as much as possible to anyone wishing to buy, not just to eircom retail. This would deliver the level playing field that the industry and consumers need and it would also ensure the speedy unbundling of the local loop which has been promised for so long.”

He claimed, however, that this separation must not happen at just any cost. “In particular we would oppose any deal with Government whereby eircom acquire rights to the MANs as a quid pro quo. That would simply exacerbate the current difficulties and makes no sense.

“We are starting to hear a lot about next generation networks (NGNs) but the ECTA report highlights once again that we cannot lose sight of the importance of local loop unbundling,” he concluded. “Europe’s broadband leaders have shown that unbundling is very positive for consumers and is an efficient way to encourage competition. However in Ireland, pricing is a very significant barrier and it must be addressed.”

By John Kennedy