ESAT turn up the heat

o_donnel_abu

Caught the tail end of FiveSevenLive this evening and there was some very interesting stuff about broadband.

As I was in car at the time, I'm quoting from memory but I'm sure someone will correct me if I make any mistakes.

ESAT today announced that the wholesale price Eircom is charging them for a broadband connection is five times the retail price that Eircom.net charges its customers. They could not make this public until today due to strict non-disclosure agreements they have with Eircom.

Eircom tried to defend their position by saying that they charge the same wholesale price to Eircom.net. Nice accounting trick that - the subsidiary makes a loss and the parent makes a whopping profit - no wonder the ODTR is getting really steamed up !

Richard Cooke, CEO of Esat, was interviewed and had a real go at Eircom. One very interesting point he made was that Etain Doyle has now threatened to refer the whole broadband pricing issue to the Competition Authority. He wants this to happen - he pointed out that whilst ODTR can only impose a ludicrous fine of £1500, the Competeition Authority can fine up to 10% of turnover if they find that Eircom is abusing its position.

As I said before, I think this broadband pricing battle could be a major watershed for the whole internet access issue.

Martin Harran

Kix

Incredible. I wonder how Esat got their hands on such sensitive commercial information. I'm no accountant but I believe that this sort of thing isn't unusual within different branches of the same company or group of course, but I am pretty sure that Eircom, in a monopoly position, are under no circumstances allowed to do it in this case. This should really blow up in their faces and I must say that I'm quite pleased.

K

P R O F A N I T Y

Originally posted by Kix
Incredible. I wonder how Esat got their hands on such sensitive commercial information. I'm no accountant but I believe that this sort of thing isn't unusual within different branches of the same company or group of course, but I am pretty sure that Eircom, in a monopoly position, are under no circumstances allowed to do it in this case. This should really blow up in their faces and I must say that I'm quite pleased.

K

they would have to know, how else could eircom bill them.
All of a sudden this whole "we will sue your ass" think they were talking baout in relation to wholesale prices makes sense

Dont be at yourself

Dear God. I didn't think it was possible, but if this is true, Eircom have actually sunk to a new low. I'm hugely angry at the moment - and frankly I'm fed up of Eircom using underhanded tactics to delay broadband. Sooner the better we have alternatives to them.

chernobyl

if the GOVT is so interested in making us E-Central for Europe, why dont they launch their own ISP, and we will see if Eircom play biatch ball with the state?

pete

From OnBusiness.ie

The recent war of words in the telecoms industry moved to a new level this evening after ESAT Telecom claimed that the wholesale rate it will be charged to access Eircoms ADSL - or high speed internet - network is over five times that charged by Eircom to its own retail customers. ESAT says Eircom expects it to pay 700 euros for each connection charge, compared with 125 euros it proposes for customers who sign up to its i-stream service. ESAT says until today it was restricted from releasing the information due to a legal agreement with Eircom. The news follows Wednesday's announcement by the regulator Etain Doyle that she is concerned Eircom's charging structure breaches competition law. An Eircom spokesman this evening said the connection fee was not an issue, and that Eircom's retail arm pays its wholesale arm the same 700 euro fee for access.

"ESAT's Richard Cooke says Eircom should be forced to follow precedents set in Spain and Italy by setting wholesale charges 40% below the retail level. - Real Audio"

http://www.onbusiness.ie/2001/0928/businesstoday/businesstoday2A.ram

Kix

Originally posted by P R O F A N I T Y

they would have to know, how else could eircom bill them.

Well of course Esat would know the price that Eircom are looking to charge them. In fact that price is public knowledge as they've had to publish it. What's being said is that some how Esat have found out what Eircom are charging Eircom.Net (two different companies) and it's a lot less that what other operators have to pay. As far as we understand it, they're not allowed to do that.


K

P R O F A N I T Y

Originally posted by Kix


Well of course Esat would know the price that Eircom are looking to charge them. In fact that price is public knowledge as they've had to publish it. What's being said is that some how Esat have found out what Eircom are charging Eircom.Net (two different companies) and it's a lot less that what other operators have to pay. As far as we understand it, they're not allowed to do that.


K

No eircom have to charge eircom.net exactly what they charge Esat, thats the whole point. what eircom.net then charge rental is there bussiness, if they choice to sell it at a great deal under cost then so be it.

The whole one wholesale price thing was meant to stop all this, and it worked in england. i guess this is what the odtr meant by squeezing the margins, and it is total illegal. never stoped eircom before

hmmm

Holy bejaysus

For those who haven't listened to the .ram, Eircom want a 700 euros connection fee from ESAT. It's beyond unbelievable, it's hilarious

P R O F A N I T Y

Originally posted by hmmm
Holy bejaysus

For those who haven't listened to the .ram, Eircom want a 700 euros connection fee from ESAT. It's beyond unbelievable, it's hilarious

Btw were the info to back this up, i mean have eircom actually admited to this, and it this is the price, what was the orginal, 1000 euros. what was this 70 euro figure being passed around.
a decent firgure for a wholesale vat included price would be 45 euros

hmmm

eh 'profanity' I can't seriously see Richard Cooke coming out and saying this if he couldn't prove it

o_donnel_abu

Originally posted by Kix
What's being said is that some how Esat have found out what Eircom are charging Eircom.Net (two different companies) and it's a lot less that what other operators have to pay.

Not quite right - Eircom are charging Eircom.net the exact same price as Esat (or anyone else). This price is 5 times what eircom.net charges retail customers (i.e. you and me) for connecting.

The point is that Eircom are not bothered about Eircom.net losing money on this as the excessive charges are coming straight back into the pockets of Eircom the parent.

I think you're right that they are not allowed to do this - that is why Esat would welcome the involvement of the Competition Authority .

I am highly surprised at Eircom taking this approach as IMO they have left themselves wide open for accusations of "abuse of dominant position".

I can only come to two conclusions:

1) Eircom are so caught up in their own propoganada that they really believe they can defend their position or

2) The ODTR is gradually putting them into such a tight corner that this represents a 'last desperate throw of the dice'.

I really do believe that Eircom are on their last legs, I just hope that the ODTR and/or the Competition Authority can quickly put them - and us - out of their misery

Martin

sceptre

I'm just after falling off my chair with laughter. Literally (I really should back it up against the wall while reading anything to do with Eircom's business practices)

(from http://www.onbusiness.ie/2001/0928/businesstoday.html)
An Eircom spokesman this evening said the connection fee was not an issue, and that Eircom's retail arm pays its wholesale arm the same 700 euro fee for access.

Oh, that makes it all right of course. It's not like Eircom itself will be able to make the money back from its retail arm (if Eircom weren't allowed have an ISP arm, the prices would be really transparent, though they'd still be as high).

OK, so to answer Martin's question (though it was rhetorical at the time):
Eircom have lost the plot

Totally (but it's official this time).

It has to be a matter for the Competition Authority at this point. With great respect to any G-men or ODTR-types who frequent the forum, I think you need help from anyone willing to give it. Not sure if the time is ripe, but I for one will be writing a letter both to the Irish Competition Authority and the European competition commissioner on or after the weekend. Straws and camels' backs come to mind.

nahdoic

I am totally shocked. Will Eircom finally get its cummupins?

O the sweet, sweet irony and justice of it all. I am quite, quite happy right now

I do believe a Shakespeare quote from Hamlet is in order:

"hoist by it's own petard"

SkepticOne

Remeber that this is just the connect fee. Eircom can still kill off competition by keeping the monthly wholesale rate high. Still, I wonder what Eircom are playing at.

smokin' an'chewin' man

Originally posted by Kix
Incredible. I wonder how Esat got their hands on such sensitive commercial information. I'm no accountant but I believe that this sort of thing isn't unusual within different branches of the same company or group of course, but I am pretty sure that Eircom, in a monopoly position, are under no circumstances allowed to do it in this case. This should really blow up in their faces and I must say that I'm quite pleased.

K

Quite the contrary - this is a VERY common little two step that corporations do on a regular basis to knock back competitors or make big savings on sector taxes and enhance share values. In this case it's hard to imagine Eircom can honestly expect to get away with it, and it's more than likely just their latest rear action in their delaying strategy. Let's hope they didn't envisage Doyle pulling out the competition authority card. And let's hope the Gov allow her to do it.

This is also what Doyle has been alluding to in her whole argument recently - the method Eircom uses to calculate the cost of the service. It appears to be tossing many millions of pounds of capital costs irrelevant to the service and charging this elevated cost to Eircom.net, intentionally causing it to lose money.
When it loses money Eircom say 'we told you so' to the ODTR et al. write it off to tax and meanwhile the competition is knobbled.

Things look like they are coming to a head folks. Doyle could be raising the anti and the next round of actions will be decisive.

This is exactly why I have been damp on the impulsive boycott action. Let's hold our powder, keep our eyes on the ball, and make plans.

SkepticOne

Originally posted by smokin' an'chewin' man


Quite the contrary - this is a VERY common little two step that corporations do on a regular basis to knock back competitors or make big savings on sector taxes and enhance share values. In this case it's hard to imagine Eircom can honestly expect to get away with it, and it's more than likely just their latest rear action in their delaying strategy. Let's hope they didn't envisage Doyle pulling out the competition authority card. And let's hope the Gov allow her to do it..

Once again, they used their "This is what we charge Eircom.net so it must be fair" line. As sceptre said, this means nothing at the Eircom level since Eircom.net is a subsidiary not a separate company.

The only reason I can think for them doing this rationally is to create a smokescreen for high monthly wholesale rates. By backing down on this outragious connect charge, Eircom can give the ODTR a little victory. Additionally, the sheer outragiousness of the connect fee makes the wholesale rate look good.

P R O F A N I T Y

Originally posted by hmmm
eh 'profanity' I can't seriously see Richard Cooke coming out and saying this if he couldn't prove it

Not what i was saying, more along the line of disinformation,
im sure no ones making it up here, but the sources may be less then perfect

sceptre

I'm not doubting the source (as Eircom themselves have said since that it is so)

Anyone got a contact at TheRegister?

(I'm sending it to Volta as I speak - they'll probably pick it up anyway but I'd like to make sure)

And small victory for the ODTR or not (which hasn't happened yet either) - the monthly charges are still too high. Can't see IOFFL letting that one go either - "...affordable..." etc

P R O F A N I T Y

I just noticed something, by saling it at under the wholesale price, they can claim their subing it, and therefore are the good guys

Kix

I stand corrected. I was barking up the wrong dog.

K

ekehoe

Originally posted by sceptre
Anyone got a contact at TheRegister?
Can't see IOFFL letting that one go either - "...affordable..." etc

I'm sending it on to Tim Richardson at the Reg, and fingers crossed we can get it picked up other places. I just don't know what to say right now...still a bit stunned. We all know Eircom can be low, but this is just....wrong.

E

kamobe

I recently sent a mail to the competition authority and got a reasonable reply from them. They said they would look at the situation and asked for any further information i had on the topic.

o_donnel_abu

Originally posted by kamobe
I recently sent a mail to the competition authority and got a reasonable reply from them. They said they would look at the situation and asked for any further information i had on the topic.

Any chance of you copying these to me, kamobe, could be worthwhile us making a similar submission as a body.

Martin Harran
Chairman, IrelandOffline

rickoshea

EU may intervene on local loop

26/09/2001 Foot dragging by incumbent operators in unbundling the local loop in European countries may lead to action being taken by Brussels.

In recent weeks Mario Monti, the European Union Competition Commissioner, has said that his department may investigate pricing structures and alleged anti-competitive behaviour by large telecoms operators. Prices for local broadband internet access have not been reduced in recent months, and are still much higher than in the US. Action could also be taken against EU countries over their failure to create a competitive market for telecommunications to homes and offices.

Despite EU regulation opening the local loop to competition, very few individuals and businesses can get fast internet access over their copper telephone wires from alternative high-speed internet access providers.

SOURCE: http://www.europemedia.net/shownews.asp?ArticleID=5733

ando

i really do hope brussels starts to kick some eircom ass

BoneCollector

I sent an explosive mail to mary o rourke
pointing out that the government is responsible for selling off a monoply which now controls the future of ecommerce and broadband to ransome in this country.

why dont we all! start an email campaign and get some attentiion.
and if you dont get a reply you can phone them on there advertised phone number.

and probably CC the mail to as many other political party`s or members as you can get email address for. :mad: