Eircom Prices Ignore Falling DSL Tariffs

Nuno

http://www.ireland.com/newspaper/finance/2002/0301/2039068281BWNET01.html

Eircom prices ignore falling DSL tariffs
By Karlin Lillington



NET RESULTS: Walk around the bustling banking city of Frankfurt and you see the advertisements everywhere: high-speed DSL (digital subscriber line) internet access at €25 per month from Deutsche Telekom.

It's a painful reminder for an Irish visitor that there is a world out there in which countries are actually trying to grow their consumer broadband market rather than dithering over whether enough people will want the service to create a market.

At €25 - a sum that would almost certainly undercut even a casual internet user's monthly phone bill for slow, metered dial-up access - who wouldn't want this service? The approach has served Deutsche Telekom well. Some 2.1 million Germans have broadband access using DSL.

Now British Telecom (BT), after hinting for weeks, has announced it will slash the cost of wholesale DSL from £25 sterling (€41) to £14.75 (€24) monthly.

Wholesale DSL is what other service providers purchase from BT to create their own consumer offering. Rival providers noted this week that the drop in wholesale prices meant consumer DSL would now drop to or below £30 a month in Britain.

Analysts in Britain believe this is the price at which a broader swath of the public will be willing to pay for DSL. Current prices, at around £40 to £50 per month, are a bit too high for many people who are not heavy Net users and do not see any great cost or speed benefit. Unsurprisingly, at existing rates only 136,000 people have DSL.

BT's drop in wholesale pricing has been viewed with some suspicion by other operators, mainly because the company waited so long to make the cuts. Like Eircom, it has long maintained that it could not offer a product at a lower cost and still make money. Now the company says it can make money, despite the drop, because it can find other efficiencies in its network.

A knock-on effect is that companies offering high-speed internet access through cable modems have been galvanised into improving their services. Several cable operators in Britain told journalists they would match prices while offering faster access than DSL.

Contrast this to the situation here, where Eircom's DSL offering has stalled due to a legal challenge to a ruling by telecoms regulator, Ms Etain Doyle.

She determined last autumn that Eircom's proposed DSL monthly pricing, at €75 for wholesale access and €99 for consumers, was too high. Eircom insists it must charge this amount due to its own costs and because it feels the market will not be particularly interested in DSL. Of course, there are cost issues for a small operator in a small market. However, one has a suspicion that there's more smoke and mirrors than substance to Eircom's complaints.

Certainly, the company cannot be eager to cannibalise its more lucrative dial-up market in order to service - or, heavens above, even create - an emerging broadband market.

Delaying tactics of this sort have served BT, Deutsche Telekom and other European dominant operators well. They have watched smaller challengers in the DSL and broadband arena wither away as the hoped-for fast-growth commercial market for broadband failed to emerge. Into that breach stepped - surprise, surprise - the dominant operators, who now control 99 per cent of the DSL market.

But if BT says it can manage wholesale DSL at £14.75, one has to wonder what gross inefficiencies in the network mean Eircom needs to charge €75 for the same service and why our consumer product should be introduced at four times the cost of Germany's DSL package.

Our local and long-distance call pricing has not been similarly impeded by the fact that the Irish market is smaller. We also seemed able to fund one of the first digital telecommunication networks in Europe in the 1980s - an era when small size seemed an argument in favour of swift and innovative action rather than an impediment.

•••••

On a completely different subject, the Department of Justice has at last published the Data Protection (Amendment) Bill, 2002, this week. This crucial and shamefully overdue piece of legislation brings the 1995 Data Protection Directive into Irish law (just seven years later).

The Bill gives much greater protection regarding the use of an individual's information and extends its provisions to both electronic and manual data. For companies, this Bill means far greater responsibilities in managing data.

Major changes include the provision that all data controllers - holders of data on individuals - must register with the Data Protection Commissioner's Office. Gatherers of data must obtain explicit consent from an individual to use their data and individuals have the right to block access to certain kinds of data for certain kinds of uses.

How these provisions will align with Government policy on unsolicited commercial e-mail - otherwise known as "spam" - remains to be seen.

Perhaps they will become tools for creating one of the first anti-spam legislative environments in Europe. An examination of the Bill is provided on the website of the Data Protection Commissioner at www.dataprivacy.ie/3n.htm.

b20uvkft6m5xwg

Certainly, the company(eircom) cannot be eager to cannibalise its more lucrative dial-up market in order to service - or, heavens above, even create - an emerging broadband market.

"Welcome to Comms in Ireland"
Thats a nice layman's version of the Telco Sector:)


BTW the Data Protection piece is very interesting too and I heard something about it recently- You might want to post it up on the Nets/Comms board or Security as well

Nuno

I agree with you 80p, it is a good article for the layman but I think
the reporting style was very dispassionate. I know sometimes that's the way a good journalist should write but in this case I think not. In ireland we are great at moaning about injustices done to us,but most people just sit back and take it. We should all be screaming blue bloody murder over Eircoms stance of keeping us in the technological darkages.

This, I think, is were the press come in. We need somebody with high exposure getting passionate about this issue, instead of just publishing another report that shows some statistic.

I think Karlin did a very good job of presenting the facts in the article, but next time I'd like to see a bit more attitude.

End of Rant.

b20uvkft6m5xwg

Fair point- tis a bit "matter of fact"
Karlin has been good to IrelandOffline on the whole though

dahamsta

Good article, but if there's one thing that annoys me it's inaccuracies, especially when we're only a phone call or an email away...

Contrast this to the situation here, where Eircom's DSL offering has stalled due to a legal challenge to a ruling by telecoms regulator, Ms Etain Doyle.

As I've said what seems like a thousand times here, i-Stream was not held up by a legal challenge, it was held up by a direct challenge by the Regulator. Eircom are litigating on the LLU pricing issue, and as far as I'm aware, are still negotiating directly with the Office of the Regulator on this matter.

She determined last autumn that Eircom's proposed DSL monthly pricing, at €75 for wholesale access and €99 for consumers, was too high.

In fact, the prices are higher than that. I'm unsure of the wholesale price, but the proposed retail price to consumers is €132. VAT is implicit in a retail price to consumers.

adam

gandalf

Adam,

It might worth your while firing in a response to the letters page of the IT pointing these out. Just to keep this issue in the public eye.

Gandalf.

skrobe

good artical but and a big but it has the wrong price on it . she say i-stream is 99Euro its not its 133Euro per month. even allow that her price doesnt inculde vat (21%)it would be 121Euro

dahamsta

From: adam beecher
Sent: 03 March 2002 21:16
To: lettersed@irish-times.ie
Cc: klillington@irish-times.ie
Subject: Eircom DSL Pricing

Sir,

Your newspaper recently published an article on the issue of Eircom Digital Subscriber Line (DSL), and while I'm delighted to see Karlin Lillington continuing to highlight the very serious problems we are being faced with in Ireland, I'm afraid the article was factually incorrect, to a degree where Eircom in fact come out of the wringer looking better that they should. I would like to correct the inaccuracies:

- Most importantly, the proposed base level retail pricing for Eircom's i-Stream ADSL product is not EUR99, as stated in the article, but substantially higher at EUR132. Since this would be the only DSL solution that could possibly be considered viable for most consumers, the price is quoted here including VAT. The proposed pricing is freely available on the Eircom website, you can reach the relevant pages using the shortcut <www.adsl.ie>.

- Secondly, the article stated that "Eircom's DSL offering has stalled due to a legal challenge to a ruling by telecoms regulator, Ms Etain Doyle", however the legal challenge by Eircom does not relate to Eircom's proposed i-Stream ADSL product. This product will be offered via "bitstream", which in essence makes it a "rented" product (i.e. Eircom Multimedia would rent the product from Eircom Plc. for resale). The Regulator was concerned that Eircom Plc's proposed wholesale pricing was not cost-oriented; and created a "margin squeeze" with Eircom Multimedia's proposed retail price.[1]

When challenged on this, Eircom capitulated not by lowering the proposed wholesale pricing, but by raising the proposed retail pricing -- this can be ascertained by referencing the "Pending Changes" document(s) on Eircom's website. Editors, journalists, and more particularly the ODTR and the Competition Authority, should note this with interest, since Eircom's actions demonstrate a clear lack of separation between Eircom Plc. and Eircom Multimedia, which has led to this quite obvious demonstration of anti-competitive behaviour; and a clear preponderence by Eircom to attempt market control.

- To clarify the legal challenge mentioned in the article, this relates to Eircom's proposed pricing for interconnection related to Local Loop Unbundling, as laid out in Eircom's Reference Interconnect Offer (RIO), which was finally released by Eircom almost a year later than mandated by the European Union. The ODTR found that Eircom's RIO was not cost-oriented, and when Eircom were not able to satisfy the Regulator with cost-oriented pricing, she mandated pricing herself, using an average of European pricing. Eircom has challenged the Regulator on the method by which she arrived at this pricing. The case has not even progressed to the discovery stage yet. You can find plenty of documentation regarding Eircom's RIO by searching for "RIO" on the ODTR website[2].

As a representative of IrelandOffline, an organisation campaigning for the rollout of products and services of this type, I thought these inaccuracies should be brought to your attention. IrelandOffline would be delighted to consult with you or your journalists on Internet connectivity issues in future.

Regards,

Adam Beecher, Public Relations Officer

IrelandOffline <www.irelandoffline.org>


[1] ODTR Information Notice:
http://www.odtr.ie/docs/odtr0175.doc

[2] http://www.odtr.ie/doc_search_content.asp

Manic

This is a really good reply Adam. I am waiting
with bathed breath to see what sort of an egotistical,
negative and down right 'pass the book' sort of reply
you get from them. If any!

Manic

MrPudding

nice one dahamsta