[ARTICLE] ST business: Eircom is stifling the Irish economy

lucernarian

Personal view column:

It is an accepted fact that widespread availability and adoption of broadband is an issue of national importance. It is essential to drive competitiveness, encourage foreign direct investment and maintain Ireland's ranking as one of the world's top economic performers.

Last week in this column Eircom argued that it is a commercial profit-making organisation that must deliver a return on investment to its shareholders.

In my opinion, it is the turbo-capitalistic, short-term demands of Eircom shareholders to deliver dividends that is taking precedence over the best interests of the Irish telecom consumer.

Although 70% of the country is covered by broadband, less than 5% of people have signed up for the service. This penetration level is far below what could be achieved. As a result, Ireland Inc is being disadvantaged.

Under the terms of its licence to operate, and as custodian of the former state-owned telecom network, Eircom is required to facilitate competition and provide alternative operators with access to its network.

However, the telecoms company has yet to embrace fully the fact that competition is a necessary part of its operations. As a consequence, the wholesale price Eircom charges for access to its network, enabling other operators to deliver DSL (digital subscriber line) broadband, is too high.

The direct effect of this is that alternative operators, including my company, Perlico, have DSL broadband available now, and want to invest in marketing, but cannot do so because the sector simply does not provide a viable return.

Markets as diverse as Britain and South Korea show that the roll-out of DSL broadband technology over the incumbent operator's network allied to the existence of true competition is essential to achieving mass adoption.

As further proof of Ireland's unattractive competitive environment, many international DSL broadband suppliers such as AOL and Wanadoo remain absent from what is one of Europe's top-performing economies.

If wholesale access prices were at a reasonable level that enabled alternative operators to compete, there would be more competition, more investment in educating the market about broadband, more choice for consumers, lower prices and, ultimately, increased penetration of the technology over a shorter period of time.

The net effect is that few suppliers are investing in marketing the product and broadband penetration rates remain persistently low.

This low level of competition means the government's directive to bring Ireland to European average penetration rates of 20% by mid-2005 is likely to be missed. In fact the target subscriber figure of circa 350,000 by June 2005 is likely to be underachieved by up to 50%.

This means that Ireland will continue to lag behind its European counterparts unless steps are taken now to make the marketing of broadband in Ireland more attractive to other operators.

According to Comreg, the industry regulator, Eircom now retains 99% of the wholesale market for DSL broadband.

The company continues to acquire only a limited number of subscribers with little threat of competition because of high network access charges.

With regulatory and political will there is now an opportunity to decrease wholesale network access charges so as to open the market to viable competition.

Iain MacDonald
managing director,
Perlico.

lucernarian

Typical! I spend 45 minutes typing that article only to find out that someone has already done it for you while you were typing! FFS... :rolleyes:

Moderators, close this if you wish.

Paddy20

Best and most concise piece I have read in a very long time.

Good on ya.

Mr Iain MacDonald.

DonegalMan

To_be_confirmed wrote:

Typical! I spend 45 minutes typing that article only to find out that someone has already done it for you while you were typing! FFS... :rolleyes:

Ahem ... hate to tell you this ... but you could have cut'n pasted it from here

Never mind, we appreciate the effort

eircomtribunal

To_be_confirmed wrote:

Typical! I spend 45 minutes typing that article only to find out that someone has already done it for you while you were typing! FFS... :rolleyes:

Moderators, close this if you wish.

Sorry about that.

I think the McDonald article is good enough to have its own thread. McDonald was on one of the recent The Business programmes with rte. I only got the last bits and cannot find the thing on the rte website. But I'll find out tomorrow.
In an earlier The Business programme they had it about changing telecom providers and they have a good guide on the website
links to the story and the guides are this:
http://www.rte.ie/radio1/story/1022882.html
http://www.rte.ie/radio1/story/1023409.html

P.