"The insider: Barefaced cheek of Eircom chiefs."

Dangger

Great article in today's SBP well worth a look. Great to see such fantastic analysis and fud busting!

I listened last week to Working Lunch on Newstalk. Damien Kiberd was interviewing Eircom's commercial director, David McRedmond.

A few weeks earlier I went, at the request of a spin doctor, to see the man who runs the Eircom ESOP (Employee Share Option Programme), Maoiliosa O Culachain is a former Army officer, barrister, and human resource manager.

According to his little slide show, the advisers to his `workers' ESOP' are Citigroup Investment Banking, Merrion Capital, KPMG Ta x, and Financial Dynamics.Watch out for their logos on Liberty Hall windows.

In the days when Eircom was owned by the state, the taxpayer got financially raped - and hadtofundthe company's losses - run up because of Eircom workers' refusal to change working practices and deal with overstaffing.

But today the unions are sitting at the top table - with 30 per cent of the ordinary shares in their pocket, €173 million worth of preference shares with a coupon of 12.25 per cent, €120 millionworthof Vodafone shares from the sale of the mobile arm, and €74 million in cash.

In fact they own about 24 times more equity in Eircom than Tony O'Reilly, the company's chairman.

(and there is plenty more)

....
McRedmond defended the line rental increase of 25 per cent this year by telling listeners that Eircom had reduced their call charges to compensate.

Of course it has. Because it has to c omp ete on c all charges - with mobile and other providers. But call volumes for Eircom through its network are falling.

Yet because of a tame regulator, we are expected to pay 25 per cent more as a fixed charge for lines that we use less. It's like a highly indebted hotel group where room occupancy has plummeted getting away with pushing the room rentals up for the diminishing level of guests.

It wouldn't work. The dwindling band of remaining guests would move away and put the hotel out of business.

But Eircom stays in business, paying massive dividends and making massive capital gains because it has a monopoly on the network and a pussy cat regulator.

McRedmond's other piece of lunchtime radio cheek was to boast that Eircom is investing €200 million a year in the network.

What he didn't say is that that is half the amount by which the assets of Eircom are depreciating each year.

That means either that Eircom is massively under-investing in the business, or that its depreciation charge is massively overstated.

And if its depreciation charge is massively overstated its profits are massively understated. The company can't have it both ways.

....

Mr_Man

In the main section of the paper there are a number of articles on the line rental increase, including an enditorial comment.

My favourite section from the insider piece is

Irish consumers and the economy are going to lose, not just by over-pricing but by under investment too. The country's competiveness is at risk. We deserve better than a pussy cat of a regulator

I think that the pussy cat comparison is over playing the role of Comreg, even a pussy cat has some uses, Comreg seem to have no worthwhile reason to exist - unless they can find some backbone.

M.

Moriarty

The SBP won me over a few months ago, the only sunday paper ill get now. Quality reporting, not another press release regurgitation rag.

yellum

Originally posted by Mr_Man
Comreg, even a pussy cat has some uses

Comreg - A pussycat regulator that allows the eircom rat to suckle on its teets.

gandalf

Well I was pleasantly surprised by the number of articles in todays SBP about the line rental increase. They have hit the nail on the head with their coverage.

Compare it to the Sindo (or O'Reilly broadsheet tabloid) and the only mention of the increase is the ESAT BT ad on the second page. Its a disgrace that O'Reilly has such control over a number of media outlets thats stiffles a major story such as this.

Gandalf.

topgold

The Sunday Business Post and the Sunday Tribune both give Eircom's price-gouging a major shakedown. Not surprisingly, The Sunday Independent doesn't even mention that the country is up in arms over Eircom's extortinate behaviour.

parasite

anyone want to write a pointed letter to the sindo concerning their neglect to mention one of the main news stories of the week ?
:mad:

Valentia

Comreg seem to have no worthwhile reason to exist

Of course they, along with the Director of Consumer Affairs, serve a very useful function. The only reason they exist is to keep the flack off of the relevant Minister. The press are even more gullible by inviting Carmel Foley et al to be the spokespersons when they (the press) know full well that they are only buffers for government.

Isn't Minister Aherne using the situation very well though? The Knight in shining armour about to give his own departments creation a kick in the ass. Ahhh politics survives on the gullible and there's no shortage in this country :dunno:

Eurorunner

Well done to the Sunday Business Post. They simply couldnt have given a more comprehensive account of the €ircon saga.

And as for Joseph Duffy, i dont like the man, i hate his show and try to avoid earshot of it at all costs - but i must put those views aside when it comes to his show last week.:p

corkie

State set to close line rental loophole
By Gavin Daly
The government is expected to close the loophole that allowed Eircom to boost its line rental revenue by €120 million since 2000.
More

Consumer anger with Eircom spills onto the airwaves
Outraged consumers vented their anger over the latest Eircom price hike on RTE's Joe Duffy show last Wednesday.
More

Rivals claim Eircom line hike is an anti-competitive subsidy
By Kathleen Barrington
The number of enquiries to rival phone companies soared last week after Eircom signalled plans to hike line rental prices in February. More

ComReg failure aids Eircom
By Kathleen Barrington
Eircom's controversial decision to increase line rental charges is another sign that competition isn't working properly in the Irish market, according to the author of a new book on competition in Ireland. More

dahamsta

Thanks Corkie.

The government is expected to close the loophole that allowed Eircom to boost its line rental revenue by €120 million since 2000.

[...]

The telecoms regulator, ComReg, is also exploring ways to prevent further increases in line rental charges.

Keywords: stable door horse bolted.

machalla

One thing caught my eye about the article yesterday. Theres a claim in it that Eircom are trying to bring in a €25 admin for anyone who changes their phone provider. So if you go from Eircom to UTV then its €25 extra. If you go from UTV to Eircom will the same apply?
Can they get away with charging the residential consumer this fee or is it supposed to be a business to business (pardon me business to monopoly) charge?

Anyone know anything about this? Surely it would be a huge dampener on competition in the residentail phone market?

Ripwave

Originally posted by machalla
One thing caught my eye about the article yesterday. Theres a claim in it that Eircom are trying to bring in a €25 admin for anyone who changes their phone provider. So if you go from Eircom to UTV then its €25 extra. If you go from UTV to Eircom will the same apply?
Can they get away with charging the residential consumer this fee or is it supposed to be a business to business (pardon me business to monopoly) charge?

Anyone know anything about this? Surely it would be a huge dampener on competition in the residentail phone market?

They want to charge this fee to the other provider for handling WLR requests (not CPS requests). Today, with CPS (Carrier Pre Select, where by default any call you make is handled by the other carrier), you get two bills, one from oreillycom, and one for your actual phonecalls from your carrier. This "two bill" scam doesn't occur in other countries - it's inefficient, and it makes dealing with anyone other than oreillycom for your calls more inconvenient, and more expensive. It's also probably illegal, as oreillycom are supposed to treat all providers in a "non-discriminatory" way, which means that, legally, they should be sending you two seperate bills, one for your line rental and one for your calls.

Oreillycoms solution to this is to introduce WLR (Wholesale Line Rental), which, according to McRedmond, hasn't been implemented anywhere else in the EU, and which will cause even greater hassle and confusion for end users, as non-oreillycom customers will get the run around if they call 1901 about service problems. ComReg have decreed that WLR operators will get an 8% discount on the retail cost of line rental (at least until June 2004, at which point they haven't indicated if there will be any discount any more). The WLR operators will have costs (administration, advertising, bad debts, etc), and this 8% wholesale discount is supposed to allow them to pay for their overheads and compete with oreillycom. This "discount" will amount to about €16 per year (pre-VAT). Oreillycom are intent on negating this discount by charging €26 to process the changeover. This means that WLR operators will be paying more for your line wholesale than you're paying for it retail, for at least the first 18 months! And that assumes that ComReg renews the 8% discount requirement.

wexfordman

Lads,

Stop complaining about €ircon, you all know we are better off since it's privatised. Especially thos of us who were unfortunate enough to have bought €ircon shares at the first flotation. Or at least thats what the Independent says (who owns the independent again ?), as we'd all be much worse off if €ircon had not been bought out. Check out the link below for the Indo's slant on it:-

http://www.unison.ie/business/personalfinance/stories.php?ca=258&si=1108603

Not only are we better off, I assume that the value of the shares have fallen as the companies are worth less (or in €ircons case worthless). If thats the case, I'm sure they wont be re-floating.....

Thanks Tony for saving us all from ourselves.

Wexfordman

MarVeL

Somehow they fail to explain how we would have been excluded from the €500m windfall the poor Tony had to suffer through for his altruism. I'm sure we would have been excluded (it is Ireland after all) but it would be nice to see the proposed machinations

dahamsta

I'm sure the "Independent" would be delighted to hear your feedback on this piece.

http://www.unison.ie/unison/info/contact_unison.shtml#2

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wexfordman

Would this be the same "Independent" who have loads of mention on their website about €IRCON cutting the cost of BB, but shag all about the increased line rental ?

Just in case anyone else wanted to mention this to the editor if they were going to bother contact them. Personally, I'm quite happy for them to carry on and lose any credibility they have or had.

I had prescribed to the independent website, but methinks I'l unsubscribe......

Wexfordman

godfrey

heres an interesting twist I learned about today:

if a customer changes from €ircon to another provider, €ircon has the right to demand the application form carrying the customers signature, which must be produced within 3 days. if it doesnt get it, they can switch the customer back, regardless. the other telco's cannot do this.

whaddya think of that?

g

jd

Originally posted by godfrey
heres an interesting twist I learned about today:

if a customer changes from €ircon to another provider, €ircon has the right to demand the application form carrying the customers signature, which must be produced within 3 days. if it doesnt get it, they can switch the customer back, regardless. the other telco's cannot do this.

whaddya think of that?

g

Thats's a direction from comreg to stop "slamming" . You sure other companies don't have the same. Are you sure other telcos don't send the same letter..
Jd

Raoul Duke

Here's what happened to me....I get my calls through NTL. That was until I forgot to pay the Eircom bill. So they cut me off. I immediately paid up and got reconnected. In the next Eircom bill I discover that I'm being charged for calls again. I ring up and complain and am told that I should have gone through all the rigamarole with NTL again for them to take my calls.

Ridiculous or what?