[INDO]Phoney war as Esat calls on users to switch from 'costly' rival

#1 · 19-10-2004 9:27am #1

CONSUMERS who switch from Eircom to Esat BT are guaranteed lower prices for every kind of phone call they make and will no longer face the inconvenience of paying a separate bill for line rental, Esat claimed yesterday.

Esat customers will pay less for local, national, international and calls to mobile, beating even Eircom's best discount package, they say.

Last night, an Eircom spokeswoman rejected Esat's claim and said Eircom's Talktime discount packages could offer customers better value for money.

Esat said that householders who opt for online billing get €5 off every bill. Esat will also pay their first month's line rental, a saving of €24.18 or €19.98 ex VAT.

Those who manage phone and internet online can save themselves up to 41pc

About 10,000 of Esat's current 60,000 home users have already availed of single billing and the company has set a target of 120,000, doubling their customer base, within the next 12 months.

The move to single billing follows the end of Eircom's line rental monopoly, following a directive by the Minister for Communications earlier this year.

Bill Murphy, CEO of Esat BT, said having to pay a separate line rental bill had stopped many consumers from shopping around for better call rates.

"We are delighted to offer consumers a real choice. They can now benefit from our guaranteed lower call rates without the hassle of two bills," he said.

Mr Murphy said "Eircom's stranglehold" meant Irish householders had seen the cost of their phone line rise over 24pc in the past 18 months.

He said Esat BT will continue to push for this to be lowered to ensure a truly liberalised phone market. Despite deregularisation, Eircom still has 80-85pc of the 1.2m strong consumer market, with customers exhibiting a reluctance to move if that meant paying two bills.

Esat offers consumers line rental at the same price as Eircom but promises the savings come through the calls.

"A lot of customers still think it is extremely difficult to change. It's not. Call us or get on the website, click a few buttons and you'll get a bill from Esat," Mr Murphy said.

The company said switching over does not involve anyone calling to your home and should take no longer than 10 working days.

Householders can keep the same phone number and all the same services and those eligible for the Social Welfare Telephone Allowance Scheme will still get their allowance.

But a spokeswoman for Eircom urged their customers to consider their discount Talktime packages and insisted they could beat Esat rates. For example, those who opt for the €5 add-on for the calls to mobile package will pay as little as 14c per minute on daytime calls, a lower rate than that offered by Esat, she said.

Meanwhile, Esat promised even greater savings to business users if they made the move as many companies may be paying for redundant phone lines they are no longer using.

When they make the move, some businesses will save 10-20pc on their bill by auditing their capacity and even more for multi-site organisations.

Grainne Cunningham

Good to see Esat promoting the fact that those eligible for Social Welfare Telephone Allowance can get their phones and calls from telcos other than eircom..

Sleipnir · 19-10-2004 9:31am

That's a good article. Was written in the SBP by any chance?
They are cheaper than Eircom, they just have to convince people that it
is very easy to change over.

seamus · 19-10-2004 9:41am

And people scoffed when I said that dual billing was stifling competition.....

viking · 19-10-2004 9:44am

Sleipnir wrote:

That's a good article. Was written in the SBP by any chance?...

Its from today's Indo.

damien · 19-10-2004 10:59am

There's coverage about this in the Examiner too today. Picture of Bill Murphy with two girls in tight T-Shirts. I thought it was the Sun I was reading. Can't find the EsatBT press release on their website.

It's good that single billing is readily available now from the countries second biggest telco. The online billing with monthly discounts is a nice touch too.

I think we'll see Eircom lose a lot more customers now as a result of this. Which in turn may mean more winback calls as well as them trying to hike the line rental increase to maintain their margins. We'll need to fight to prevent this from happening. Esat needs to push for a greater wholesale line rental percentage too which they can pass on to the customer.

damien · 19-10-2004 11:21am

10pc single billing margin not enough, warns Esat BT
By John Kennedy

19.10.2004 - Ireland’s second largest fixed line telco Esat BT has warned that the present 10pc margin allowed to telcos engaged in single billing is insufficient when you factor in costs of acquiring and billing customers and has pressed for the margin to be boosted to 25pc, siliconrepublic.com has learned.
Esat BT yesterday launched single billing services covering Ireland’s 1.6 million both business and consumer lines, ending an era of dual billing by other licensed telcos (OLOs) and the incumbent, Eircom. Esat BT has battled for over two years to make single billing a reality.

The rationale and advantage for OLOs is that there is less likelihood of customer churn as customers can see for themselves the savings they make on calls as well as preventing Eircom to target customers with marketing literature in their line rental bills, thus making customer acquisition costs more equitable.

Under existing wholesale rules, however, OLOs are only entitled to a 10pc margin off the cost of a €24.18 line rental charge. Under this arrangement they pay €21.76 for the line, leaving a profit margin of €2.42.

Esat BT product director Peter Evans warned that once the costs of sales, marketing, billing and other details such as bad debt are factored in OLOs are left with little or no profit and would have to focus on increased earnings from calls to ensure a profit.

“Ourselves and other providers cannot offer real savings on the present line rental situation. In future, the Commission for Communications Regulation (ComReg) is pushing to increase the margin to 25pc and we would obviously be backing this as it would enable us to offer substantial retail savings. It will be 2005 at the earliest before ComReg successfully manage to move the margin to 25pc,” Evans said.

“Having to pay a separate line rental bill to Eircom stopped many consumers from shopping around for better call rates,’ commented Bill Murphy, CEO of Esat BT. ‘We are delighted to offer consumers a real choice. They can now benefit from our guaranteed lower call rates without the hassle of two bills.”

In a directive earlier this year by the Minister for Communications, Eircom was forced to allow competitors to give consumers call and line rental costs on one convenient bill. Penalised for choosing an alternative provider, consumers continued to receive a separate line rental bill from Eircom. As a result, many had stayed with the former state company despite their high call charges.

“Under Eircom’s stranglehold, the cost of line rental to Irish households has risen over 24pc in the past 18 months to be amongst the highest in Europe,” Murphy added. “Esat BT will continue to push for this to be lowered so that consumers can enjoy the real benefits of a liberalised phone market.”

A spokesperson for Esat BT argued: “If the line rental was cheaper we could offer cheaper services. At present Eircom wins either way. ComReg have a long way to go to widen the margin.”

It is understood that as a result of single billing, Esat BT is preparing a strong set of bundled packages that include mobile, wireless, DSL and voice-over IP (VoIP) services. One bundled package that siliconrepublic.com understands is being readied for a pre-Christmas rollout includes all-you-can-eat phone calls, VoIP, DSL broadband and line rental for less than €70 per month.

Mr_Man · 19-10-2004 11:41am

“Under Eircom’s stranglehold, the cost of line rental to Irish households has risen over 24pc in the past 18 months to be amongst the highest in Europe,” Murphy added. “Esat BT will continue to push for this to be lowered so that consumers can enjoy the real benefits of a liberalised phone market.”

I haven't heard a lot of noise from Esat about having the line rental decreased, have you ? This is a purely cynical marketing ploy by Esat. At the end of the day all they are concerned about is getting a big enough margin to improve their bottom line. So expect to see a combination of an increase in the line rental, and an increase the wholesale margin early next year.

Comreg will off course try to sell this as good for the consumer and competition. But we all know that Comreg have ignored the ministers order to remove Line Rental from the basket of prices which control Eircom's return despite the fact that there is no competition, or decrease in the line rental by June 30th. No doubt they have spent their time on more important matters like askcomreg.ie, just to keep the plebs happy and make it look like they are doing something.

M.

eircomtribunal · 19-10-2004 4:53pm

Mr_Man wrote:

So expect to see a combination of an increase in the line rental, and an increase the wholesale margin early next year.

Comreg will off course try to sell this as good for the consumer and competition. But we all know that Comreg have ignored the ministers order to remove Line Rental from the basket of prices which control Eircom's return despite the fact that there is no competition, or decrease in the line rental by June 30th.

Comreg had deliberately removed the previous condition in the basket measurement procedure, that any price rise may not rise the lower quartile of bills (the quarter of bills at the lower end; the bills of the customers who have few calls, but mainly pay for the line rental) more than the overall allowed rise ( 5% it was then) to enable Eircom to hike the line rental by 25%.
Had that condition stayed in place, the line rental hike would not have been possible, as the 25% line rental rise impacted the lower quartile of bills massively, as you can imagine.

Comreg did this as they felt Eircom did not get enough money to pay their costs for the lines. And there is a stipulation in the EU framework that prices have to be cost orientated.

To offset the disadvantage of a steep price rise for the lower bill payers Comreg put the low usage scheme into place, which is a very tiny fig leaf indeed. They also claim that introducing the whole sale line rental would offset the steep price rise for the low-bill payers. Which is not convincing, as its eircom resale minus 10% price arrangement will do nothing to stop a further rise, which will again disproportionately hit the lower bill payer.

Isn't there some statement of Eircom to their shareholders where they brag about their good financial position because of the high line rental profits?

P.

Paddy20 · 19-10-2004 5:45pm

Goodness, its all happening HeeeHEEEE. Hope your squirming Eircom, where's your damned RAT ! gone now that you need it?....

[INDO]Phoney war as Esat calls on users to switch from 'costly' rival

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