Eircom worry about ESB/Voda transfer pricing

clohamon

Eircom have an interesting submission in ComReg's call-for-input on regulation relating to the National Broadband Plan (NBP).

http://www.comreg.ie/publications/national_broadband_plan__call_for_input_on_regulatory_implications_-_submissions.

They're worried that the difference in regulation of capital costs, between energy and communications, will allow ESB to subsidise their bid by transfer pricing from their energy supply network.

Specifically, differences exist between the Telecommunications and Electricity regulatory approaches to capital investment recovery and to associated connection and subscription charges pricing. For example, pricing principles for connection to the electricity network set out by CER ensure that much of the excess capital investment cost of distribution connections above an urban cost, are recovered through connection charges. This means that the capex burden on ESB is essentially an urban one with higher costs of providing connections in rural areas being funded up front by customers. In addition, unlike the rigorous ex-ante approach to regulating eircom’s wholesale and by extension, eircom’s retail prices, it appears to be necessary that ComReg will regulate the transfer prices that ESB networks may charge to its downstream bidding arm as it competes for Government funding to offer telecommunications services in the intervention area.

...and they think wholesale NBP prices should be benchmarked off their urban network

.....and that they should be compensated for the declining revenues from their rural copper USO which they foresee during the transition to NGA.