Other regulators can do "stuff"

bealtine

Free claims EUR 500 mln from France Telecom broadband delay
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French ISP Free is seeking EUR 500 million in damages from France Telecom for having allegedly blocked, then slowed down its broadband internet growth, at the end of the 1990s. France Telecom has confirmed this information in Lettre de l'Expansion. La Tribune writes that people close to the matter explain that although ADSL service began commercially in 1999, there was no opportunity for competition to be exercised fully until regulator Arcep imposed price cuts for partial and full unbundling at France Telecom exchanges only in April 2002, and that the market did not take off until the end of that year. Neuf Cegetel made a similar damages claim in the summer of 2005. France Telecom told Reuters that Free's demands were largely baseless.

layke

We can always dream we will someday have the gov behind the people.

DublinWriter

Or maybe we can dream that someday our national telecom regular/ombudsman won't be financed by the telecoms industry.

It's a bit like the wages of the police being paid by the criminals.

bealtine

DublinWriter wrote:

It's a bit like the wages of the police being paid by the criminals.

It's worse than a "bit", every time Comreg "authorize" a line rental increase their (Comreg's) income goes up (afaik). So there is no incentive for them to regulate prices downwards as is happening in most other regulatory areas like France etc...

cgarvey

I'd like to see a source for that claime, bealtaine, as it seems a bit of a wild claim to be just throwing out there.

.cg

damien

Doesn't ComReg get a percentage of the turnover of every telco? If eircom make more, then the takings of ComReg would go up but the income of another crowd could go down.

bealtine

damien.m wrote:

Doesn't ComReg get a percentage of the turnover of every telco? If eircom make more, then the takings of ComReg would go up but the income of another crowd could go down.

As far as I can tell Comreg impose a levy on all Telcos which is related to turnover.
For instance in 2001 they made E43,000 from the telecommunications levy alone.
In 2002 they made E48,000 from the same levy.

As far as I remember there was at least 1 increase in that period and at least two after.

You can draw your own conclusions...

They no longer breakdown the levies any more in their latest financials.

Tom Young

bealtine wrote:

As far as I can tell Comreg impose a levy on all Telcos which is related to turnover.
For instance in 2001 they made E43,000 from the telecommunications levy alone.
In 2002 they made E48,000 from the same levy.

As far as I remember there was at least 1 increase in that period and at least two after.

You can draw your own conclusions...

They no longer breakdown the levies any more in their latest financials.

ComReg has a Levy Order placed on a national statutory footing entitling them to levy telecom operators to the tune of 1/5th of 1% of relevant turnover as certified by an independent auditor.

Funds in excess of the Levy are not returned to operators.

.cg, I tend to agree with you on basis for the previous statements. Whilst it is true to comment that line rental baskets are capped and subject to allowed inflationary increases it is vexatious to claim that a regulator is not impartial and independent from influences. Contrary to this, regulators can appear to suffer capture at times when they are working to the benefit of the common good.

With the onset/introduction of WLR services, line rental increases can indeed buffer revenues of new entrant operators but unfortunately the margin is not great on that offering.

Who would want to be a regulator, my my, I think its the most thankless existence anyone could ever wish to fulfil. The job satisfaction ratings must literally be in the minus betas!

Tom

bealtine

Tom Young wrote:

ComReg has a Levy Order placed on a national statutory footing entitling them to levy telecom operators to the tune of 1/5th of 1% of relevant turnover as certified by an independent auditor.

Tom

One must not also forget the "Telecommunications administration levy" which is also based on turnover. It is calculated as 0.2pc of a company's turnover.
This too is levied on all telcos.
These two levies are how Comregs telecommunications division is funded so therefore any rise in turnover will give Comreg a bigger take. Sactioning a line rental increase obviously is to Comreg's benefit as well.
This is a logical given.
While also it is a given that most of Comregs income is derived from Spectrum licensing fees and the telco levies are a much smaller proportion of income it is still not to be sneezed at.

In relation to the "common good", this is a fuzzy term with absolutely no meaning whatsoever.
Does it mean the common good of the people ?
Does it mean the common good of the telcos?
Does it mean the common good of Comreg?

We all know how Comreg like to treat consumers so it cannot possibly be #1 on the list.
My heart bleeds for those doing such a thankless job for the "common good".

The essential point of my initial post was that other Regulators can achive things Comreg cannot, so why is that? Why can Arcep impose price cuts and Comreg not do the same? This has stimulated competition in other regulatory jurisdictions and has clearly been seen to do so. We all exist under the same EU directives (allegedly). If competition can be boosted by such a simple and effective measure then why all the hand wringing by Comreg?
This is the debate I want to open.


The only logical explanation, I can find, for the failure of Comreg to boost competition by such simple means is that it is not in their interest to do so.

Tom Young

One must not also forget the "Telecommunications administration levy" which is also based on turnover. It is calculated as 0.2pc of a company's turnover.
This too is levied on all telcos.

Did I not mention that in my post!? ComReg has a Levy Order placed on a national statutory footing entitling them to levy telecom operators to the tune of 1/5th of 1% of relevant turnover as certified by an independent auditor.

Funds in excess of the Levy are not returned to operators. Though provision is made for that in the SI, section 7. (b).

The only logical explanation, I can find, for the failure of Comreg to boost competition by such simple means is that it is not in their interest to do so.

Can't agree with this.

Common good

to mean the general regulatory stools:

Competition
Consumer protection
Compeition law
(recently innovation)

Likewise I hold the view that we are dealing here with a regulator that focuses more on number 2, consumer protection.

I don't agree with the premise that price cuts are necessarily a good thing. Many telco servics are already highly commoditised.

The essential point of my initial post was that other Regulators can achive things Comreg cannot, so why is that?

Possibly frustration through lack of attention to constitutional rights of operators to a fair trail and due process of the law, and a pretty illconcieved appeal process convened by a minister who clearly is a policitally influenced party. This is a failing and is due to be addressed in the future. Challenges are frequent and plenty and some might comment that resource is a problem when the NRAs expertise is less than that of the industries, all sectors included including postal. The EU Commission are dealing with the issue of appeals that are dictated or mentioned in the 2003 Framework Directive.

Why can Arcep impose price cuts and Comreg not do the same?

This regualtor has a clearer role in the market, a huge staff of highly qualified mutli disciplinary employees. Also their legal basis for decisions is rarely challenged and they deal with a market exponentially larger than the Irish market. 'Horses for courses'.

This has stimulated competition in other regulatory jurisdictions and has clearly been seen to do so. We all exist under the same EU directives (allegedly). If competition can be boosted by such a simple and effective measure then why all the hand wringing by Comreg?

Price cuts do not generally stimulate competition, providing value does, or giving fair access to regulated offerings, just for example. You are leanging towards price competition when you refer to price cuts, not withstanding clear issues with the various components of the Irish Telecom sector which are much more highly priced than that of our EU and international counterparts, e.g., line rental, mobile tariffs etc.

Price cuts would force New Entrants OUT. Yes, OUT of the market. :eek:

EU Directives are applicable to the member states in which we live vertically, regulations are more appropriately applicable in your commentary are having a horizontal effect on the rights of businesses and consumers to act on market failuers.

So I disagree that cutting prices is a simple and effective measure. The average margin's on most telco offerings are so tight that price cuts and the knock on effects could prove detrimental.

I assume you have studied the weighted average cost of capital associated with the general telecom environment and then applied that to the various market components to show a modelled and true effect of random revenue/price cuts and their relevant margins?

watty

For once I agree with a lot you say...
Eircom price cuts has little impact on helping competiton, ironically high pricing helps Wireless & Fibre.

Of course having One supplier, no competiton and price cuit would help the consumer. A market effective for Competition may not always give the lowest price to consumers.

Competition would be helped by better other forms of regulation.
No matter what the price of eircom is, they do better than the dsl based/cps compettion because they own most of the network. This is the flaw in the idea of competition on any national utilities, especially in a small country (Gas, Water, Electricity, Phone, Postal delivery, TV/Radio network, Cable, Trains etc..).

I don't know how it can be solved. Nationalise the Network and let all the Retailers pay same price for exchange Loop and Network access?

Essentially that is/will be the model for TV/Radio now and DTT in the future. The idea of selling Analogue network and licencing DTT network to a third party seems to be abandoned.

The privatisation of eircom was botched. There does need to be stronger regulation, LLU, Glump and number Porting should be minutes or hours. Or at worst a day to two delay but only minutes of loss of service changing LLU broadband provider.

There is a lot of dis-incentive for people to move from eircom, and if it is bitstream, CPS, LLU or GLUMP, eircom still make most of the profit. Many times most of the competitors.

Line rental is at LLU and Retail maybe twice what it should be, but simply enforcing a cut on it won't fix the Irish market, unless all the other things are fixed first.

Tom Young

watty wrote:

For once I agree with a lot you say...

I tend to be pretty consistent, the tone may not sit well with people, but that's not my problem.

By the way GLUMP and LLU is about to hit the fence, re: NGN.

Watty, indeed your point on eircom is dead on.