[Irish Times] Energis urges break-up of Eircom

damien

Energis urges break-up of Eircom

http://www.ireland.com/newspaper/finance/2005/0530/211101716BZENERGIS.html

Telecom firm Energis has called on ComReg to break up Eircom, arguing that the former State monopoly's dominance of the market is damaging the economy.

In a submission to ComReg's ongoing review of the sector, the company said Eircom's retail unit should be separated from its networks division in order to stimulate investment in the network and foster fair competition in the industry.

Behind Eircom and BT Ireland, Energis is the third biggest fixed-line operator in the market. The company has annual sales of some €43 million and annual earnings before interest, tax, depreciation and amortisation of about €1.3 million.

Energis claimed that Eircom's access to its network gave it lower costs and more control of the standard of service it provided and the service its rivals provided.

This led to under-investment in the sector, it said, arguing that network investment in new technologies was half that of Britain, France and Portugal.

"The strategy of the monopoly is to maximise short-term shareholder profit at the expense of long-term growth. This 'dividend play' places cash that other countries are spending on upgrading their assets into the pocket of a small number of shareholders.

"The incumbent will continue to defend its position against all threats," it said.

"The only way we can increase competition in the market is through all operators having equal access to the national infrastructure. Eircom has not provided equal access in the past and we should expect that they will continue to deny equal access in the future."

Energis said that a separation of Eircom's network business from the retail unit would ensure that Eircom's retail operation competed on a fair basis with the rest of the industry.

Stating that such a structure had worked the US telecoms market and in the Irish and British electricity markets, Energis said this would allow one entity to invest in a reliable well-maintained network.

It said a single national network with equal access to all service providers was the most efficient way to create and deploy investment in the network.

"Experience in the US would also suggest the split entity has a real chance of delivering improved value for shareholders."

dahamsta

Energis claimed that Eircom's access to its network gave it lower costs and more control of the standard of service it provided and the service its rivals provided.

It also puts them in a fantastic position to frustrate rivals by, for example, delivering wholesale products to an SLA schedule rather than a genuine deliverable time. As my BT saga has proved.

adam

Paddy20

Good on ya, Irish Times and Energis. Every bit of pressure helps.
As IOFFL has so often proven.

P.

jbkenn

damien.m wrote:

Energis urges break-up of Eircom

So what?

Energis employ 50 people in Ireland, and are only interested in major corporate accounts, they could'nt give a toss for the little guy, from their own website (I presume this is in relation to LLU in the UK)
http://www.energis.ie/internet/pages/news/newsitem.aspx?section=08_11_2004

Energis says no to “uneconomic” LLU
Energis will not invest in a national local loop unbundling (LLU) program, it was announced today.

Energis has seen considerable success with its strategy of delivering great service to large corporate and government customers. This decision frees up investments enabling it to accelerate that progress. Customer service and innovation will drive the next round of Energis’ investments.

John Pluthero, chief executive of Energis, comments: “LLU is uneconomic for national roll-out. It involves a significant up-front investment with no apparent return in any realistic timeframe. Frankly, we’ve got better things to do with our cash.

“We’re putting all our time and effort into executing our strategy. Yes LLU success could be good for consumers, but there are other exciting technologies that we will invest in which will offer our customers even more services”.



Notes for editors:

Energis is a technology-driven communications company. Our aim is to help the largest and most successful organisations and public institutions in the UK and Ireland achieve their business goals using technology. Our range of solutions include data, voice, call centre and Internet and hosting services. Major customers include the BBC, Boots, Centrica, Royal & SunAlliance, Tesco, Wanadoo and the UK Government.

For more information please contact:

Media Centre
Energis
Direct Dial: +44 (0)118 919 3499
Switchboard: +44 (0) 20 7206 5555
http://www.energis.com

jbkenn

damien

http://www.enn.ie/frontpage/news-9610473.html

(You gotta love the eircom ad next to the story)
Tom Hickey was in Regulatory Affairs in EsatBT.

In spite of various actions taken by the communications regulator ComReg, Tom Hickey, the newly elected chairman of ALTO, the association representing alternative operators in the communications market, has said that regulation has failed to create a competitive market. Hickey made these comments in a document that ALTO has submitted to ComReg outlining Eircom's continuing dominance in what it believes to be several critical markets.

New and radical action is needed to turn the market around, according to Hickey, who said "these solutions must include the division of Eircom's retail and wholesale divisions into units that are operationally, functionally and legally separate."

Splitting Eircom into separate retail and wholesale divisions is not a new idea; ComReg itself mooted the idea in a forward-looking statement in April saying it believed that such a move could remove "any incentive for [Eircom] to discriminate in favour of its own downstream arm," which in turn could lead to an increase in equality of access, encourage competition in more advanced broadband access and prevent any leverage of market power from one area to another.

Hickey believes that increasing competition is the only way that Ireland will be able to catch up with other developed countries in the telecoms sector. "ComReg has been using the tools available to it", said Hickey. "However, Eircom has retained its dominance and has been able to frustrate the efforts of competitors."

ALTO believes that Eircom has a stranglehold over 87 percent of the domestic calls market, 99 percent of the lower level access market, 80 percent of the wholesale market for call termination and 100 percent of the market for copper local loops.

"This level of market dominance is not just bad for the telecommunications market it is bad for the economy," said Hickey. "Competitive modern telecoms is a key factor for inward investors."

The broadband market has been cited by Hickey as an example of how a lack of competition can negatively affect a market segment. The latest OECD survey showed that Ireland ranked 24th out of 27 OECD countries for broadband penetration with just 34 connections per 1,000 users.

"All of the major regulator-mandated products provided by Eircom to date have experienced difficulties. The latest example of this is local loop unbundling (LLU), where Eircom and ComReg are currently engaged in a High Court review as a result of a request by new operators to have certain products and facilities provided in a coordinated manner," said Hickey. "This has led to several months delay already."

In assessing the situation Hickey concludes that separating Eircom into two entities is the only suitable solution to increase competition in the Irish telecoms market. "This is the only way that Eircom can be incentivised to treat all users of its products and infrastructure equally," said Hickey. "This would mean that it would be in the wholesale business's interests to offer access to as many retail operators as possible and to invest in its network infrastructure to enhance the products available to them."

While the co-operation of Eircom would be preferable on this issue, Hickey believes that the State should examine the option of forcing Eircom to separate. In its forward-looking statement ComReg commented that while it did not have the power to force separation this could be achieved under section 14 (7) of the Competition Act 2002.

damien

http://www.alto.ie/media/docs/ComReg_Strategic_Review.pdf

vinnyfitz

It is good to see ALTO return to the fray. I had felt they had gone a bit quiet.

dahamsta

Well, we've had two statements recommending the breaking up of Eircom this week, will we be seeing IrelandOffline offer a recommendation of it's own? I hope so. If nothing else (assuming IrelandOffline agrees that the wholesale and retail arms of Eircom should be separated administratively and technically at the very least) another comment on this subject from a known organisation might push it further into the mainstream press and the mainstream mindset.

jbkenn, I don't really understand what Energis' size, commitment or target market has to do with it. I have major problems with a lot of OLOs and ISPs in Ireland, but I still believe that they should be allowed to compete on a level playing field with Eircom retail.

adam

damien

These are all from submissions from the ComReg Future Strategy consultation. How many here made submissions? Did you Adam?

Edit: To clarify, I started a thread two weeks back specifically about this. We asked the posters here to help us formulate our reply to the ComReg document and asked for peoples opinions.

What we got mostly was that the posters here couldn't be bothered to send in their views or to help us. Yes, we're big boys and well capable of formulating opinions, we're in fact overflowing with them, but I find it kind of grating that we are now being urged to join the press party about this when going the more important route wasn't encouraged by the posters on this forum.

Apologies Adam if it seemed I was gunning for you, I'm not, but I'm not into playing press games for the sake of it. We made a formal submission, which I think is more important.

dahamsta

damien.m wrote:

These are all from submissions from the ComReg Future Strategy consultation.

I scanned the article, didn't realise that it was from submissions. I wasn't criticising, I was asking a question. Wasn't it obvious? Was I not polite?

adam

damien

dahamsta wrote:

Wasn't it obvious? Was I not polite?

If you're pricked, do you not bleed?

dahamsta

Dirty fecker.

(I've just this minute reconnected to broadband. It's like puppies rolled in chocolate. I promise to be even-tempered for at least a week.)

adam