Eircom To Ask For More State Subsidies

Sponge Bob

Lets go back just a bit shall we .

1. In 2006 Eircom asked for €200m to fix their crappy pairgains because Comreg don't care about Universal Service

http://archives.tcm.ie/businesspost/2006/10/22/story18313.asp

Eircom is to enter talks with the Department of Communications about exactly how it plans to fund the upgrading of rural phone exchanges to make broadband available in all parts of the country.

Sources close to Eircom said the government tender to upgrade those exchanges should also include fixing the problem of shared lines, or ‘carriers’ as they are called.

The exact number of lines around the country affected by the problem has not been disclosed, but the cost of fixing it would be around €200 million, The Sunday Business Post has learned.

That was a no.

2. In 2008 eircom asked for 'up to' €500m to enable them to compete with UPC in the large towns and cities where UPC provide a service

http://www.eiu.com/index.asp?layout=IwPrintVW3&article_id=1613261346&printer=printer&rf=0

Ireland internet: Eircom asks government for broadband subsidy

April 21st 2008


FROM DIALOG NEWSEDGE
[The Irish Times]

EIRCOM HAS confirmed making a proposal to Government under which it would provide high-speed broadband to the nine "gateway" towns and cities identified in the National Spatial Strategy, provided the State lends some financial support.

The cities are Dublin, Cork, Limerick/Shannon, Galway, Waterford, Dundalk, Sligo, Letterkenny and the midland towns of Athlone/Tullamore/Mullingar. These urban areas are home to almost 70 per cent of the Republic's population.

Eircom is believed to be looking for the State to provide some of the funding for the upgrade, which would cost about 500 million, because of the current tight credit markets. To avoid accusations of unfair subsidies for the telco, Eircom would be split into a wholesale and networks division and a retail division. The retail division would be sold off and the new Eircom network company would sell to all operators on an equal footing. Eircom is also seeking a change in telecoms regulation so that the "netco" could make an agreed return on its investment and operating costs.

Eircom would achieve the high speeds (25Mbit/sec) by running fibre-optic cable to telecoms cabinets on the street. The upgrade would take five to seven years.

That was a no.

3. Eircom through their IBEC front are to demand another €2bn off the government next week I understand . It may be dressed up as a recovery bond of sorts but it is a subsidy nevertheless .

It is outrageous that IBEC are demanding such an amount from the public purse when they know that well over €2bn has been siphoned clean out of eircom since 2001 .

Total of all eircom begging initatives in the past 3 years , €2.7bn .

Improvemen in Irish Broadband penetration relative to our peers in teh last 3 years , NONE

rardagh

Eircom probably could argue that this capital requirement would be reduced, if the Government/Comreg:

1. Removed/Reduce the scope of the USO - such that they wouldn't have to maintain network, or provide service, more that a 1-2 km away from their exchanges. Given the success of the minister's NBS program, it is unfair that eircom have to provide, under USO, service to locations that are perfectly adequately served by a functionally equivalent 3 mobile connection.

2. Facilitated the sharing of the financial burden of this USO requirement, maybe it's time that O2/Vodafone/Three would share this burden and facilitate an annual transfer to eircom that could be used to recover the USO costs?

3. Ring fenced the likely c. €2 billion that will be generated by the auction following the imminent expiry of original frequency licenses of O2 and Vodafone. Eircom could make the case that such monies should be invested into their network for the national benefit.

In IBEC, eircom have a strong ally.

Tom Young

Ally - I think eircom runs TIF. Any new entrant who subscribes there should seriously take a good look at the tactics.

I have heard about the recovery bond idea and it sucks.

Tom

Sponge Bob

Tom Young wrote: »

Ally - I think eircom runs TIF.

eircom runs TIF , correct . To a lesser extent so do O2 and Voda but the big three dominate TIF and anybody else who joins it should know that .

I feel rardagh was bing just a tad ironic in his comments , O2 and Voda will surely never let TIF recommend an auction of their 900mhz spectrum

Sponge Bob

It was €2.5bn not €2bn and they got Analasys Mason to do the begging for them

http://www.siliconrepublic.com/news/article/13905/comms/irelands-next-generation-access-network-will-cost-2-5bn-to-build

Note that €2bn of the €500bn would only fibre 50% of the population (all in Cities and Large Towns over 5000 persons and some towns over 1500 persons leaving the rest on 3 Mobile Broadband with some on copper last mile ( albeit shorter copper than now)

There is absolutely no way that the Irish are so dispersed that it will cost 10x the UK cost per drop . That is bloody ridiculous .....even for an eircom begging exercise .

TIF did not recommend an auction of the shortly to expire 2G 900mhz spectrum either, of course not . That would raise a sizeable chunk of money were it auctioned ...not quite €2.5bn though !

bk

Yardley said that by his calculations it would cost €1,500 per home that would be passed by FTTH.

Hmm, it is €675 per home for Verizon in the US (including some very rural areas) and the number quoted by most European ISP's (with similar or worse population densities like Sweden) is €1000 per home.

Given 1.6 million homes, that would come out at €1.6 million for all homes in Ireland.

However realistically, you could probably do FTTH for the five cities and FTTN for the rest of the country for less then €1 billion.

While all of this might sound like a lot of money, a line rental of just €10 per month for ten years would bring in €1200 per line, easily paying for itself and being quiet attractive as the line should continue to work fine for at least 30 years.

People currently pay a ridiculous €25 per month line rental to Eircom and the only reason Eircom can't afford to do this is because most of it goes to paying their massive debt and sustaining old rotting copper lines.

ninjasurfer1

bk wrote: »

People currently pay a ridiculous 25 per month line rental to Eircom

is this not because of comreg not allowing eircom to reduce their line rental charges? Somebody mentioned it on another thread in here i think.

Sponge Bob

Nope.

Eircom want the taxpayer to help fund the building of an entirely new network and they want to control it thereafter.

Yet if eircom do not build this network quickly , in the big cities, they will surely die. Cable is killing them and so is Midband .

Blaster99

bk wrote: »

However realistically, you could probably do FTTH for the five cities and FTTN for the rest of the country for less then €1 billion.

While all of this might sound like a lot of money

I used to think €1bn was quite a lot of money, but I've recently learnt that it's perfectly ok to borrow a couple of billion a month to keep the country afloat and spend €50-odd billion on developer loans to keep the banks afloat. I doubt there will be too many other billions around for the next 10-20 years but if there is, spending one on this would seem like a pretty good idea.

I have to agree with SB that eircom is basically defunct. Many fixed line operators are seeing falls in revenue but they're at least trying to come up with innovative products. I presume eircom's most profitable product is the line rental, which tells you everything you need to know about eircom.

bk

ninjasurfer1 wrote: »

is this not because of comreg not allowing eircom to reduce their line rental charges? Somebody mentioned it on another thread in here i think.

No, Eircom could reduce the line rental if they really wanted to. What they are blocked from doing is unfairly bundling their line rental with phone and bb as a loss leader (each part has to be independently profitable). Which is fair enough as otherwise Eircom could completely kill of the other bitstream operators like Vodafone.

The other problem is that Eircom have been lying for years to Comreg about how much it costs to maintain the network in order to justify the high line rental, it would be tricky for them to u-turn on these lies now that they need to.

Sponge Bob wrote: »

Eircom want the taxpayer to help fund the building of an entirely new network and they want to control it thereafter.

Yet if eircom do not build this network quickly , in the big cities, they will surely die. Cable is killing them and so is Midband .

Yes and that is exactly why they shouldn't get a cent from the taxpayer (other then the carrier neutral fibre and one stop shop as you suggest SB). They don't have any choice but to make this investment themselves. And if they don't and they die then it would be better for the government to let them die and then pick up the pieces to build a carrier neutral FTTH/FFTN network.

Blaster99 wrote: »

I used to think €1bn was quite a lot of money, but I've recently learnt that it's perfectly ok to borrow a couple of billion a month to keep the country afloat and spend €50-odd billion on developer loans to keep the banks afloat. I doubt there will be too many other billions around for the next 10-20 years but if there is, spending one on this would seem like a pretty good idea.

Yes and the best bit is, if you don't have Eircoms ridiculous debt, then it really is pretty self financing, a company set up to do this, 51% government owned would have little difficulty getting private finance to cover the cost which should easily be payable over 10 to 15 years at €10 per month line rental.

Such a company could also attract participation of most of the other telcos with them getting a slice of the other 49% of this company and access to the whole expanded network in return for moving their own fibre assists under this company. This would be attractive for the likes of Vodafone, o2, UPC, BT and maybe even Eircom.

It just needs some vision and leadership by someone in government, little chance of that.

Blaster99 wrote: »

I have to agree with SB that eircom is basically defunct. Many fixed line operators are seeing falls in revenue but they're at least trying to come up with innovative products. I presume eircom's most profitable product is the line rental, which tells you everything you need to know about eircom.

Yes the fixed line rates are dropping at an alarming rate and Eircom are in serious trouble. I even hear rumours that Sky are about to introduce new Sky boxes that won't require a phone line for multiroom, killing another reason why people hold onto phone lines and GSM dialers are becoming increasingly common in alarm systems.

Also social welfare recipients can get the €25 paid into their back account if they want to go with UPC or mobile phone company, a very attractive option for many people.