Devils Advocate

tribble

'ning lads,

I was having it out with the 'aul lad about Eircom and their curmudgeonly ways.

He made the points that...

1. Eircom is a private company, so what if their a virtual monopoly their allegiance is to shareholder NOT THE PUBLIC. If you don't like it why should they care?

2. We live in Ireland. Land/Labour/Capital and Utilities are more expensive here than abroad. Of course this will affect the price of the product.

3. Eircom are a small company (by eurotelco standards) in a TINY market. Economies of scale will affect both the price and to a great extent the AVAILABILITY of newer (read faster) technologies.

Anyone care to comment?

tribble

MarVeL

1. As long as they hold a monopoly they shouldn't give a damn. Once that goes however

2. We also live in Europe. If a home based company can't do the job maybe someone abroad can (after all why should we care about a private company, it cuts both ways)

3. I'd agree to an extent

dub45

Originally posted by tribble
'ning lads,

I was having it out with the 'aul lad about Eircom and their curmudgeonly ways.

He made the points that...

1. Eircom is a private company, so what if their a virtual monopoly their allegiance is to shareholder NOT THE PUBLIC. If you don't like it why should they care?

2. We live in Ireland. Land/Labour/Capital and Utilities are more expensive here than abroad. Of course this will affect the price of the product.

3. Eircom are a small company (by eurotelco standards) in a TINY market. Economies of scale will affect both the price and to a great extent the AVAILABILITY of newer (read faster) technologies.

Anyone care to comment?

tribble

1. While Eircom is a private company it is shortsighted (even in Ireland) to ignore their broader responsiblities as eventually it will invite the Government to intervene in some way so a monopoly cannot do what it wants. Eventually competition will also increase. And it goes without saying that allowing Eircom to become a public company was a huge error from the country's point of view.

2 & 3. I am sure there are theses to be written about these but dont forget productivity, innovation and technology can offset some of this.

For instance rather than being innovative with broadband and the opportunities it presented Eircom had to be dragged kicking and screaming into it.

tribble

Originally posted by MarVeL

2. We also live in Europe. If a home based company can't do the job maybe someone abroad can (after all why should we care about a private company, it cuts both ways)

I don't see any foreign company expressing an interest in offering alternative telephone/data service that doesn't piggyback of Eircom. I must therefore presume it would be uneconomical.

Originally posted by dub45

1. While Eircom is a private company it is shortsighted (even in Ireland) to ignore their broader responsiblities as eventually it will invite the Government to intervene in some way so a monopoly cannot do what it wants. Eventually competition will also increase. And it goes without saying that allowing Eircom to become a public company was a huge error from the country's point of view.

If I was them I wouldn't worry too much about the government, they don't seem overly concerned with the state of bb.

Personally I agree that the handing over of the copper/exchanges to Eircom was suicide but they have it now so fair play to them.

tribble

bk

Originally posted by tribble
'ning lads,

I was having it out with the 'aul lad about Eircom and their curmudgeonly ways.

He made the points that...

1. Eircom is a private company, so what if their a virtual monopoly their allegiance is to shareholder NOT THE PUBLIC. If you don't like it why should they care?

Under EU legislation, if a company has a monopoly on a market, it is required to open up its network to competitiors.

Also if the the government really wants to it can force competition, by building an alternative network (MAN projects), licensing wireless operators under a fair licensing regime.

If things where really bad then it could even breakup Eircom.

2. We live in Ireland. Land/Labour/Capital and Utilities are more expensive here than abroad. Of course this will affect the price of the product.

Labour - True

Land - Not really, they already own all the land they need from the Telecom Eireann days.

Capital - I assume you mean equipment costs, because Eircom was so late coming to the BB game, the prices of DSL equipment had greatly dropped as it was no longer a new technology, therefore the cost of making it had greatly dropped and the economies of scale (for the network equipment makers) had greatly risen.

So what Eircom paid for its equipment would be significantly lower then other telcos paid 3 years ago.

On the whole I'd say Eircoms cost for rolling out the DSL network is un par or even cheaper then other telcos in europe.

3. Eircom are a small company (by eurotelco standards) in a TINY market. Economies of scale will affect both the price and to a great extent the AVAILABILITY of newer (read faster) technologies.

Anyone care to comment?

tribble

Already partly answered in question 2. The most expensive parts of building a new network is land (for exchanges) and laying cable.

Eircom had these major costs already paid for them by the Irish taxpayer in the Telecom Eireann days.

The cost of putting DSLAMs in an exchange, backhaul (most of which was already in place) and the networking for adding DSL to the existing network is relatively low.

Interesting questions.

dub45

Originally posted by bk


Eircom had these major costs already paid for them by the Irish taxpayer in the Telecom Eireann days.

That's not true. Since 1984 when the Dept of Posts and Telegraphs was split up Eircom would not have received any money from the Irish Taxpayer. And I am open to correction on this but when Eircom was set up in 1984 I think it may have been saddled with a lot of debt incurred for upgrading at that time.

And dont forget that the Irish 'nation' benefitted financially when Eircom was sold off (for the first time)- the money is in the pension fund set up by the Govt. So anything that Eircom has from the old days it has paid for in one way or another.

Moriarty

Originally posted by dub45
That's not true. Since 1984 when the Dept of Posts and Telegraphs was split up Eircom would not have received any money from the Irish Taxpayer.

Rot. Eircom (both pre- and post- floatation) have recieved money hand over fist from the government in the form of grants to upgrade the current network and create new parts to the network. Nearly every major works by eircom in the BMW region has been partly paid for by the department of finance. Just because they aren't direct subsidies is irrelevant, they've still got a bucket full of cash from the government, usually by bare-faced bribary -

<gov> the network is falling apart in (insert bmw area here), what are you going to do about it?

<eircom> gee, were a highly profitable company but we just can't afford to upgrade the network, sorry. It's just not financially viable you see. But... if you can cough up most of the cost for the upgrade we'll see what we can do..

<gov> fine so. Here, take 20mil to start you off. Let us know when you need more. Don't go expecting this sort of treatment in future either you old rascal.

<eircom> Oh of course not. How could you think such a thing.*wink* *wink* *nudge* *nudge*

Originally posted by dub45
And I am open to correction on this but when Eircom was set up in 1984 I think it may have been saddled with a lot of debt incurred for upgrading at that time.

At the time of the (first) floatation, eircom was almost completely debt free. That's how valentia were able to milk the company for so much.

Originally posted by dub45
And dont forget that the Irish 'nation' benefitted financially when Eircom was sold off (for the first time)- the money is in the pension fund set up by the Govt.

Almost certainly the only benefit of selling off eircom like it was.

Originally posted by dub45
So anything that Eircom has from the old days it has paid for in one way or another.

.. first through a government -sponsored and -enforced monopoly, and later through a government regulator neck-deep in ineptitude, dim-wittedness and complicity. Oh, and all that money was recieved through vastly overcharging and underserving the irish consumer and business sectors. Unfailingly.

Even with all that said, eircom post-floatation did nothing wrong. Once eircom was floated, most of the blame can be laid squarely on the doorstep of government through comreg. It's not eircoms fault they acted like they did. It is and always has been comregs and the governments fault that eircom have been allowed to get away with it.

hostyle

Originally posted by bk
The most expensive parts of building a new network is land (for exchanges) and laying cable.

To bring broadband everywhere they will have to replace a lot of old cable. Half the towns / villages in rural ireland have little better than wet string connecting them to the network. At the parents place everything on the phone sounds "very distant", and dialup is limited to 22k on a good day. Eircom cut costs back in the 80s and 90s by putting down crap (cheap, low quality) lines.

bk

Originally posted by hostyle
To bring broadband everywhere they will have to replace a lot of old cable. Half the towns / villages in rural ireland have little better than wet string connecting them to the network. At the parents place everything on the phone sounds "very distant", and dialup is limited to 22k on a good day. Eircom cut costs back in the 80s and 90s by putting down crap (cheap, low quality) lines.

I absolutely agree.

However who said Eircom is going to bring BB everywhere?

Eircom have certainly never said that they would. In fact Eircom is busy installing DSLAMS in the larger exchanges and have no plans for smaller exchanges.

Also Eircom is NOT upgrading the telephone network, they are only putting DSLAMS in exchanges and laying backhaul, if your line to that exchange is crap, then you are out of luck, Eircom have no plans to do anything about it.

In fact recently a report that looked into the state of the network by an Eircom manager was leaked, it found:

1) Eircoms network is one of the worst in Europe, far below western telco standards.

2) It will cost €400 million a year to upgrade the network to average western standards.

4) It will cost €200 million to maintain the network at current bad levels.

5) Eircom are in fact only spending €150 million a year on the network. This means that the network is actually getting worse.

On the other hand, in the last 18 months, the investment owners of Eircom have taken 500 million in dividends out of Eircom. This is 50% of what they borrowed to buy Eircom, that is some return, they are simply stripping the company.

I predict that Eircom will be in serious financil difficulty soon, as the network (their only real valuable asset) continues to rot in the ground and they will be asking the government for assistance, agian.