Eircom boasts about cheap prices

damien

While everyone else is having war because the NCC showed how Ireland was so bad, Eircom neglect all the other figures and give us this guff. They left out the whole line rental thing in the below statement:

National Competitiveness Council Statement Highlights Competitiveness of Fixed Line Telecoms in Ireland

Issued 15 September 2004. eircom today welcomed the National Competitiveness Council’s statement on prices and costs in Ireland which highlights the fact that prices in the fixed line telecoms sector have bucked the national trend of rising costs. eircom is the only utility provider in Ireland to achieve this against a backdrop of rising costs in every other sector of the economy as outlined in the report.

The report highlights the fact that Ireland ranks 4th cheapest out of the EU15 for a combined basket of national and international calls, and also points out that the cost of entry level broadband services has halved over the last twelve months, with prices now near the EU average.

eircom is the only utility company that has brought dramatic price reductions to the Irish market, whereas prices in other areas have been steadily increasing. A continued drive by eircom to bring value to the consumer has seen the cost of the average telephone bill reduce by 47% in real terms over the last seven years.

They never mentioned this bit either from the NCC's William Burgess

Better regulation is also needed in areas such as energy, telecoms, transport, retailing and professional services to stimulate competition and help drive down prices. The Government should support EU moves to open up markets here to more competition from abroad, particularly for food, services and utilities as this would put pressure on high prices. Without action, employment and living standards would be put at risk, Mr Burgess said.

tipperaryboy

Eircom is full of a load of bull****.That statement really is a big lie.Tele2 are waaayyy cheaper on all phone calls,check www.tele2.ie to see that i am not lying.As for broadband,huh they are the worst for prices,EsatBT cheaper then Chours Cablenet Broadband is a lot cheaper its 35.00 per month but if u have chours tv allready it only costs 29.95 per month,the downside to chours broadband is its only available in three places Thurles,Killkenny,Clonmel.

eircomtribunal

damien.m wrote:

They left out the whole line rental thing in the below statement:

From the Eircom spin: The report highlights the fact that Ireland ranks 4th cheapest out of the EU15 for a combined basket of national and international calls, and also points out that the cost of entry level broadband services has halved over the last twelve months, with prices now near the EU average.

What enables Eircom to come out with this spin?

It starts off with the OECD basket measurements, executed by Teligen, and published in Comreg's Quarterly Reports.

In the domestic national telephone basket, which includes the fixed line component, Ireland's prices are above the EU-15 average.

In the international calls basket, the fixed line component is not figured into the calculation and only therefore Ireland's international call basket is lower then the EU-15 average.

But something much more fundamental is the problem and is overlooked by the National Competitive Council:

This was the national domestic basket of Feb 04:

Ireland was on fourth place, and lower than the EU-15 average with prices that included the fixed line component.

We had argued then (http://www.comwreck.com/blog_17_mar23.html under resources) that the important point is the following: The Irish column shows a specifically high fixed line portion of the whole price.This makes it practically impossible for competitors to strongly compete with the incumbent on call pricing.

The latest national domestic basket (in comreg pdf496b page 18) of August 2004 shows Ireland has fallen back to place eight and is now above the EU-15 average, precisely for the reasons outlined above.

And what's worse: This is only half of the picture:
The OECD basket measurements of telephone cost are taken from the incumbents' price tables. They don't really represent what the customers in the EU-15 are paying.
In countries where the incumbent is not allowed to operate that type of "margin squeeze" or cross-financing Eircom is allowed to operate, i.e. the fixed line costs, the blue columns are smaller, the competition can and does offer much lower pricing.
This has two effects:
1. The customer in those countries has cheaper alternatives to the incumbents price (all incumbents everywhere can afford to be expensive, as customer mobility in the telephony market is legendarily low).
2. The effect of the competition on prices in those countries eventually forces the incumbent to reduce its prices, as now can be seen, with Irleand falling back to 8th place and above the EU-15 average in the basket that includes the line rental costs.

Eircom's take on the National Competitive Council's report is spin. The council does not say what Eircom makes of it, but Forfas should be encouraged to look closer at the issue.

P.