Magnet Boss: "With the complicity of the regulator ..."

damien

"With the complicity of the regulator, Ireland has had the wool pulled over its eyes."

Magnet boss has an opinion piece in the Irish Times today.

After the recent turmoil surrounding Smart Telecom and the increased focus on the relationship between Eircom and ComReg, Irish business and consumers should take a step back and reflect on the current state of competitive telecommunications in this market.

First off, we should be clear that Ireland does not yet have a fully competitive telecommunications sector. I say this as the owner and chairman of the largest privately financed telecom company in Ireland and I am not alone in saying this.

Only this week, the National Competitiveness Council and Forfas highlighted broadband stakes. They point out that, despite the apparent competition in the marketplace, the incumbent operator - Eircom - has a 70 per cent foothold. This figure does not take into consideration the increased dominance at a wholesale level.

Some people find the accusation of no competition hard to believe. While there are seemingly dozens of competitors, the reality is that the vast majority are simply buying on a wholesale basis from the former monopoly and reselling it to the end customer. The actual product is effectively from the former monopoly in reality and is not a legitimate result of a competitive market.

There are some telling examples of how reality belies the illusion of competition. For example, the Government subsidises phone services for many people who need assistance, yet this subsidy is only provided if the person subscribes to the former monopoly as their telephone provider.

Furthermore, despite a decree from the EU parliament a number of years ago which stated that telephone subscribers who wished to change carriers could take their number with them, Eircom up to recently refused to abide by this law and even now says that it only has the capacity to handle a small number of such requests every day.

Even when a consumer chooses to change provider, they are forced to jump through numerous hoops. In fact, under current regulations consumers could be left without any telecommunication services for up to two weeks. The prospect of such an outage may discourage consumers from changing providers.

Other operators, such as Magnet Networks, are investing in their own network infrastructure, which in our case can provide internet, telephone and TV services through a single connection. That commitment and investment makes available the fastest broadband connection in the State with no contention while the former monopoly is limited to slower speeds and up to 48 people sharing one slow line.

This "forced sharing" by the former monopoly means that should you and your neighbours choose to use the internet at the same time, the effect of everyone competing for space means that each connection slows down to speeds less than dial-up. This is what I would call bogband, not broadband.

With the complicity of the regulator, Ireland has had the wool pulled over its eyes with this inferior product.

Today the internet represents a completely different reality to that envisaged by consumers a number of years ago. Its impact has touched on every corner of our society and the revolution is continuing unabated.

A raft of new services such as online gaming, iTunes, video conferencing and YouTube have sown the seeds for an entirely different level of demand that is not being catered for by Irish internet service providers due to the poor capacity that is available through the broadband product currently on offer.

A competitive sector requires customers who feel confident in selecting an alternative operator's services. It is up to the regulator and the Government to foster an environment where consumers will have faith in competitors and thereby be in a position to experience a superior product at a lower price.

The rest of the developed world has determined that today's inferior broadband product is not good enough. The people of Ireland have not taken a similar decision and adequately supported the competitors who provide a superior product at a lower price.

Business is tough. If a company doesn't pay its bills, at some point its supplier will quit extending credit, and that is perfectly legitimate. If consumers won't buy a competitor's product, then at some point the competitor will quit providing the product.

It is time for Ireland to decide whether it will honestly support competition or whether it just wants to talk about it for a few more years. As long as the former monopoly dominates the market and the regulator cannot, or refuses to, enforce a level playing field, Ireland will not have a truly competitive marketplace.

My great-great-grandfather and grandmother left Ireland more than 150 years ago in search of a better life. In 2003 I decided to invest back in Ireland and bring modern telecommunications at lower prices to today's Celtic Tiger. I don't think Ireland should settle for less. You should only settle for more. Support fairness and competition with your own actions, not just words, or you will lose both.

Ken Peterson Jr is executive chairman of Magnet Networks.

kaizersoze

Good article but I don't think this is true, or is it.

For example, the Government subsidises phone services for many people who need assistance, yet this subsidy is only provided if the person subscribes to the former monopoly as their telephone provider.

I thought all the providers accepted social welfare allowances.

Sponge Bob

Tis, its only on an eircom line or WLR not an LLU line .

This bit is very true , well put

This is what I would call bogband, not broadband.

Very interesting article by a VC person in the IT business today on how IBB and Digiweb have pulled in 28% of VC cash for tech in Ireland between them this year .

While Digiweb is still attracting cash the same is apparently not true for IBB or maybe they have simply stopped spending the VC cash as their network buildout is 'complete' for some time now .

kaizersoze

Sponge Bob wrote:

Tis, its only on an eircom line or WLR not an LLU line .

Smart LLU customers were/are entitled to the line rental allowance so some of them were only getting billed for €11 p/m for BB.

Tom Young

kaizersoze wrote:

Smart LLU customers were/are entitled to the line rental allowance so some of them were only getting billed for €11 p/m for BB.

Dept of Social and Family Affairs (DSFA) were to extend this allowanace to LLU and Mobile, seems they've done SFA about it. DSFA times two.

Tom Young

If a company doesn't pay its bills, at some point its supplier will quit extending credit, and that is perfectly legitimate. If consumers won't buy a competitor's product, then at some point the competitor will quit providing the product.

Nicely put.

Liam Byrne

Open message to eircom re the nature of competition:

It is becoming obvious that there is a public and governmental-level backlash against your actions last week. While I can understand, up to a point, how you might think this is unfair, given that the company involved was a creditor, I have a novel idea of how you can win back subscribers without being accused of dirty tricks, running misleading adverts or setting winback staff out to visit people who don't want them to visit.

Smart offered 3MB uncontented broadband including phone line rental for €35 per month, have now upped it to 6MB where possible, and also have a very good support staff.

Solution to the backlash against eircom which might stop people leaving:

Offer 6MB uncontented broadband including phone line rental for €35 per month, and improve your support. You could even get away with €40 per month, since it would be less hassle for people.

Pity no-one in your organisation thought of it before now; after last week there are people who wouldn't touch eircom with a bargepole!

bealtine

damien.m wrote:

"With the complicity of the regulator, Ireland has had the wool pulled over its eyes."

"Some people find the accusation of no competition hard to believe. While there are seemingly dozens of competitors, the reality is that the vast majority are simply buying on a wholesale basis from the former monopoly and reselling it to the end customer. The actual product is effectively from the former monopoly in reality and is not a legitimate result of a competitive market."

This to me is the most important point raised.
The DMCNR love to use the excuse of a "fully liberalised market" as their modus operandi and reason for not intervening in the market

This excuse is patent nonsense and should be shown to be so. LLU is still a failed entity. WLR is *NOT* competition.

They were jumping up and down in feigned outrage and indignation that one operator might have 70% or so of the carrier business (airline) and that this was bad for business and the economy etc etc.

Why do the same criteria not apply to one carrier (telephonic) has upwards of 90% of all lines. Is this not bad for business, for the economy? What stance of righteous indignation will they take on this abuse of monopoly power?
This behaviour is what we deserve as those who govern in our name (all parties) clearly think that consumers are irrelevant.

kaizersoze

Tom Young wrote:

Dept of Social and Family Affairs (DSFA) were to extend this allowanace to LLU and Mobile, seems they've done SFA about it. DSFA times two.

Maybe so. I don't know about mobiles but Smart LLU customers have posted on Boards that they are receiving the DSFA allowance and the Smart BB FAQ states:

Q. Will my DSFA allowance be affected?
A. No, your monthly allowance will be credited to your Smart Telecom account.

http://www.smarttelecom.ie/broadbandfaq.php
Maybe they're getting it because Smart also did WLR?

Tom Young

kaizersoze wrote:

Maybe so. I don't know about mobiles but Smart LLU customers have posted on Boards that they are receiving the DSFA allowance and the Smart BB FAQ states:

http://www.smarttelecom.ie/broadbandfaq.php
Maybe they're getting it because Smart also did WLR?

Yes. I think so. I just wonder did they need to endure the 8 days of no service etc. Either that or it was given in error.

RangeR

kaizersoze wrote:

Maybe so. I don't know about mobiles but Smart LLU customers have posted on Boards that they are receiving the DSFA allowance and the Smart BB FAQ states:

http://www.smarttelecom.ie/broadbandfaq.php
Maybe they're getting it because Smart also did WLR?

I rang Smart on behalf of a family member about 2 or 3 months ago and was told that the Social Welfare allowance allowance didn't apply. They would be charge full whack.

However, last year when I asked the same question, I was told that the allowance did apply and they could get it for €11 or there abouts.

probe

damien.m wrote:

"With the complicity of the regulator, Ireland has had the wool pulled over its eyes."

Magnet boss has an opinion piece in the Irish Times today.

One waits to hear in public from any other DSL providers with their views about the shambolic GLUMP marketplace.

It seems to me that we can deem silence to signify their “consent” to the status quo of wholesaling, and their submission to the eircom “hold” – a hold on the market which is costing lots of people lots of money…..

.probe

bealtine

probe wrote:

One waits to hear in public from any other DSL providers with their views about the shambolic GLUMP marketplace.

Not a chance of that...They would be scared of retaliation

HelterSkelter

the former monopoly is limited to slower speeds and up to 48 people sharing one slow line.

This "forced sharing" by the former monopoly means that should you and your neighbours choose to use the internet at the same time, the effect of everyone competing for space means that each connection slows down to speeds less than dial-up. This is what I would call bogband, not broadband.

Magnet are always harping on about this in their ads. I have BT Broadband for two years and contention has never been an issue. I always get full download speeds. Is contention really an issue? I have never heard anybody complain about it.

Foxwood

probe wrote:

One waits to hear in public from any other DSL providers with their views about the shambolic GLUMP marketplace.

It seems to me that we can deem silence to signify their “consent” to the status quo of wholesaling, and their submission to the eircom “hold” – a hold on the market which is costing lots of people lots of money…..

There are only 3 players in the LLU market - BT, who pretty much gave up on it years ago, and have been waiting for conditions to change, Smart, who seem to have decided that it's easier to stick with customers who are willing to change their number than it is to deal with GLUMP and Magnet, who seem to be willing to use GLUMP, but have made their dissatisfaction known.

BT don't currently advertise an LLU "product", but it seems that their action in publically walking out of the never-ending talks about talks about LLU a few months ago triggered a renewed interest on the part of ComReg, and the franken-process was ushered into the light of day just a few weeks later.

Note that GLUMP doesn't do anything to address the needs of companies like Digiweb, NTL or Blueface, who would like to be able to port people over to other media, with the same phone number. Rumour has it that they are limited to 60 ports a day, between them. Whether that 60 incudes GLUMP numbers too, I have no idea.

Foxwood

HelterSkelter wrote:

Magnet are always harping on about this in their ads. I have BT Broadband for two years and contention has never been an issue. I always get full download speeds. Is contention really an issue? I have never heard anybody complain about it.

It doesn't seem to be a major issue - you certainly don't see DSL users running at dialup like speeds because of contention (as suggested in the article above).

But there's plenty of anecdotal evidence that the old interweb thingy is slower at certain times when everyone else is on it. Getting a 60k download at 8PM, instead of a 90k download at 8AM is probably a fairly frequent occurrence, but not enough of a problem for people to get too upset over. If they consistently got 20k downloads at 8PM, we'd probably hear more about it.

watty

Foxwood wrote:

Note that GLUMP doesn't do anything to address the needs of companies like Digiweb, NTL or Blueface, who would like to be able to port people over to other media, with the same phone number. Rumour has it that they are limited to 60 ports a day, between them. Whether that 60 incudes GLUMP numbers too, I have no idea.

One rumour I heard was 13 a week (for one operator)... And the forms sent back if a comma doesn't match.

But since the LLU rental is nearly 12 Euro a month? Does it make much difference to competition if the process was cheap and painless. Maybe if LLU line rental was 5 Eur a month...

Foxwood

watty wrote:

But since the LLU rental is nearly 12 Euro a month? Does it make much difference to competition if the process was cheap and painless. Maybe if LLU line rental was 5 Eur a month...

LLU rental is €15.09/month. SB-WLR is only €17.01. (That's a 10% discount on the full retail line rental of €19.98).

So eircom charge less that €2 for actual "phone" service - €15.09 of the WLR charge is just for the actual copper.

When you add in the massive costs operators face before they can even begin unbundling lines in an exchange, the price of LLU is a sick joke!

watty

It's hard to see the business case to compete with eircom on LLU DSL at all then at 15 Euro. Unless you can deliver 6Mbps or more and people will pay extra for that. But it's interesting how many people on LLU can't get much more than 3Mbps and how many people on DSL can't get 3Mbps at all..

I can see why Magnet likes running its own fibre to apartments and why no-one other than eircom makes much money out of dsl.