IrelandOffline Response to Ahern Draft Directive

Xian

The boards and IrelandOffline have had, from the beginning, a symbiotic relationship. IO has intruduced many to the boards and would never have reached the critical mass it has without the contribution of members of the boards. The forum has drawn the attention of industry players, the Regulator and the Government for being the touchstone of any development (or lack of it) in internet access in Ireland. I have no doubt that this draft directive is due in no small part to the groundswell of public opinion expressed here on the boards. Now is our chance to put that to use. Dermot Ahern has issued a draft directive to the new Communications Regulator and responses to the draft are being sought. Article 13(1) of the Comms Bill states that "The Commission shall comply with any such direction". That means that what we put into our response to the directive can count. And this isn't only about flat rate. Looking at it, I reckon we have something to say about each and every point made in the draft directive (apart from the postal sector issues, of course). So print it out, read it, think about it. If you were the Minister, what would you put in the directive to ensure that before the next election Ireland will be seen to have pulled itself out of the morass it has gotten itself into regarding internet access? (for the shier amongst you you can email me).

Oh, and for all of you good folk from Eircom, Esat, ComReg etc. lurking here thinking how great it is that IO is washing its dirty linen in public, rest assured that as soon as they're all in we'll be submitting an FOI request to see your response. So if there're any skid marks there they'll be up here for all to see ;-)

Here are the core issues we see as being essential:

Communications Objectives:

• Only approximately 2% of homes have access to alternative last-mile infrastructure. The remaining 98% must use the infrastructure of the incumbent.
  Solutions, therefore, are to:
  a) Support the development alternative last-mile solutions - wireless, etc.
  b) Recognise that, in the short term, this situation is likely to continue and impose appropriate measures on the owners of 98% of the last-mile infrastructure.
• Progress in Internet access depends on innovation at the last-mile level. Given the lack of competition at this level, the needs of the market as opposed to merely the needs of the market players needs to be addressed. In addition, the future needs of the market need to be taken into consideration. Catering only to the existing market players will only perpetuate the current situation.
• Existing measures have not worked to the benefit of the consumer.
  Examples:
  a) Creation of flat-rate and partial flat-rate number prefixes - no product based on these prefixes exists and furthermore, the creation of such products does not depend on such prefixes.
  b) Local loop unbundling: Only one player availing of LLU to any great extent. There is therefore insufficient competition to bring down prices in favour of the consumer. ADSL based on LLU in Ireland is among the most expensive in the world.
• USO: The universal service obligation needs to be updated to a standard suitable for, at the very least, basic modem communication. Current standards of 9,600 are not appropriate for the year 2002.

Flat Rate:

• Affordable and cost-based pricing of the flat rate service should be stipulated in the directive comparable to flat rate packages available elsewhere in Europe.
• Interconnection at primary exchanges should be specified as part of the wholesale flat rate service to be mandated.
• A strict timescale for the introduction of flat rate should be defined. An obligation for ComReg to respond within a designated period if it believes it does not have the powers necessary to resolve the introduction of flat rate should be made explicit in the directive. A deadline should be set for the introduction of the wholesale service.

Broadband:

• Recognizing that the widespread take up of broadband is not feasible given that the pricing of ADSL in Ireland is between two and three times as expensive as similar, often better services abroad, ComReg should work towards the rollout of broadband availability in accordance with the Department's stated objective by:
  a)fostering the development emerging technologies.
  b)Immediately adjusting the wholesale bitstream price to one which is attractive to OLOs and ISPs and which allows them to make a return on their investment. The present price forces competitors to offer retail pricing in excess of EUR 100 even for the most basic entry-level service. Market research shows that Ireland is no different to other countries in so far as there is little demand for ADSL at greater than EUR 100.

SkepticOne

Great. Seems to sum up peoples opinion of what should be done. The only thing I can think of at the moment is here:

"# USO: The universal service obligation needs to be updated to a standard suitable for, at the very least, basic modem communication. Current standards of 9,600 are not appropriate for the year 2002."

9,600 should be 9,600 kbits/sec. Also I think an appropriate new standard should be specified for basic modem communication of at least 36,600 kbits/sec. This would have the effect of eliminating DACs boxes, etc., and allow for the upgrade to DSL.

MDR

I was wondering why my mailbox was so empty
Will have a think about it ...

SkepticOne

I think the key to it is a consise set of actions such that, if the Government were to carry them out, then we (IOFFL members and committee) would be happy that the Government and ComReg were doing what was necessary and would have no further complaint with them unless conditions changed dramatically.

zynaps

You mean 9600 and 36600 (33600?) bps and not kbps?

(Unless you're trying to catch them off guard and make them give us 36mbit connections in the near future because they will have said they would unwittingly :P)

zynaps

SkepticOne

Originally posted by zynaps
You mean 9600 and 36600 (33600?) bps and not kbps?

Yes.

dahamsta

Broadband:

• Recognizing that the widespread take up of broadband is not feasible given that the pricing of ADSL in Ireland is between two and three times as expensive as similar, often better services abroad, ComReg should work towards the rollout of broadband availability in accordance with the Department's stated objective by:
  a)fostering the development emerging technologies.
  b)Immediately adjusting the wholesale bitstream price to one which is attractive to OLOs and ISPs and which allows them to make a return on their investment. The present price forces competitors to offer retail pricing in excess of EUR 100 even for the most basic entry-level service. Market research shows that Ireland is no different to other countries in so far as there is little demand for ADSL at greater than EUR 100.

[/B]

Might be an idea to add "fostering the development of existing, proven technologies"; wireless networking being the obvious one.

adam

topgold

I'm adding the URL of this thread to my sig element on December emails, as an attempt to encourage people to voice their concern for the state of Irish connectivity.

Xian

Dearly beloved, the reading today is the 7th Draft Direction of Minister Ahern to the Regulator.

Consistency with Other Member States

• The Commission shall ensure that, where market circumstances are equivalent, the regulatory obligations imposed on undertakings in the electronic communications market in Ireland should be equivalent to those imposed on undertakings in equivalent positions in other Member States of the European Community.

Minister we are first in Europe for online government services, we are first in the world for software exports, if there was a g7 of knowledge-based economies we would be in it. Why, then, should we resign ourselves to second rate communications, resign ourselves to playing second fiddle, playing catch-up with our European neighbours. That's just what this direction does. Although it is an improvement on regulation to date, where developments abroad were viewed with suspicion or just plain stubbornly ignored, this direction puts the seal on the reactive nature of telecoms regulation in Ireland. Don't we deserve better? Don't we deserve a regulator that looks to the future, to emerging technologies such as ultra-wideband, open spectrum, to the kind of re-evaluation of spectrum regulation that the FCC in the US is doing, and foster these technologies as viable last-mile solutions, pre-empting actions by our EU neighbours and getting ahead for once? Sticking to your guns on the fibre rings project, ensuring that all 123 towns are connected within the 5-year timespan, in combination with a regulatory regime that is imaginative and pro-competitive irrespective of what is happening elsewhere in Europe will go a very long way to ensuring that Ireland leap-frogs our current betters in connectivity.

In the National Interest.
Response: In the National Interest.

Dustaz

Look almost perfect as a considered response.

The only thing id query would be the emphasis on the USO. Surely this is something that WILL cost money, unlike a FIACO deal. Wouldn the USO be a fight for another day or are we better addressing it now?

Fergus

Communications Objectives

In carrying out its functions, the Commission shall have regard to the objectives for the communications sector specified in the Statement of Strategy of the Department of Communications, Marine and Natural Resources:

To place Ireland on a competitive par with the top OECD economies in terms of key Internet and communications benchmarks, including price, quality and choice

The objective of bringing Ireland up to 'key benchmarks' is probably the most powerful part of the directive, but this phrasing seems far too weak.

What exactly does 'the Commission shall have regard to' mean? It sounds like they can continue to trot out the waffle about "creating the market conditions, expecting to see improvements, etc".

We need to know specifically what benchmarks Ireland is to be compared on, exactly how closely they are to be matched, and when this must be achieved. How else are we supposed to determine if regulation and govt policy is achieving its objectives?

DC

My addition on broadband would be more of a residential focus by companies with their DSL products.

So far all DSL products have been advertised ex. VAT indicating they are business products.

Esat are the only people who have mentioned residential and this is only a cut down of the lower end business product. And its not launched yet.

So, to put it another way, there should perhaps be more of a separation between business and residential products. Currently only business products being offered, so there should be a set of busienss DSL products and Residential products, perhaps at the same speeds but with better SLA and contention on business products, making residential products more affordable.

Isn't that possibly the biggest problem with ADSL at the moment? Perfectly affordable for business, but not for residential.

BoneCollector

thats fine!
Let! business pay the higher price for the same product and let them subsidise the residential product so it can be cheaper.

After all! Its Business that supplies the services
and its the residentials that Pay! for these services,
and prices for all these service`s are always based on running costs which include the cost of DSL, and with all there tax benifits they probably end up paying less than we would.

SkepticOne

I disagree that businesses would be subsidising residential customers if they brought out a residentail service (at a residential price).

The cost per service in DSL is related to the number of services sold. This is because, with DSL, there is a high initial cost when rolling out the service but the additional cost per user is small by comparison.

If they brought out DSL at a reasonable price (i.e. the price at which people are prepared to pay), then the volume would be such that they would actually get a greater return than they are currently getting.

Instead, they are charging way beyond what most people would consider paying and therefore are only selling at a small number of DSL lines. In June of this year there were less than a thousand DSL services sold. Now, 5 months later there are less than 2,000. Therefore they are only selling about around 43 a week. At this rate they will never make a return. This probably doesn't bother them because they get paid any way through other means. Most of the money paid on communications in Ireland finds its way back to Eircom. DSL would simply displace these other revenue streams. This is why I believe Eircom are acting rationally in a) delaying DSL so long, and b) charging so much for it.

MDR

I have read over both the ministers directive and IOFFL's reponse serveral times, and I must say one thing that always bothers me is the term 'affordable', its something tough to quantify.

Now the minsters directive talks about drawing paralells with other members states, but doesn't really talk specfically about ensuring services available in other member states should be made available here at an affordable price, only that they should be made available.

It may seem crass, but is their any benchmark for affordablity we can cite, perhaps a range of percentages of average annual industrail wage. You see my fear is that (and it is shared by many) Eircom will say, sure FRIACO no problem €500 a month, COMREG will go grand that product is available ... another COMREG success story .

Also perhaps the minister is directing COMREG to play catch, to compare Ireland to other EU states and mirror their services. He should really be ordering COMREG to be more innovative in the future, we don't just need to catch up, we need to move ahead of the game ....

Finally would it worth talking about increased COMREG support for community based schemes ... ?

Xian

Brothers and sisters, our second reading is from the 4th and 5th Draft Directions of Minister Ahern to the Regulator

Industry Sustainability

• The Commission shall ensure that in making regulatory decisions in relation to the electronic communications market, it takes account of the state of the industry and in particular the industry’s position in the business cycle and the impact of such decisions on the sustainability of the business of undertakings affected.

This direction looks like it was touched by the hand of Phil (no, not Lynott, the other one). It is the poor mouth as professed by Eircom: we are heavily in debt (because we mortgaged the company to buy it), we're shedding thousands of staff (because staffing levels have remained at semi-state levels to date and we want to buy out the employee union's share of the company by buying a swathe of them off), we need government funding to invest in the network (though we're making money hand over fist it's all going to pay off that mortgage, and anyway you need the network and we own it so what are you going to do?). But there really is nothing wrong with the text of the direction, it's just the wrong way around. It should read "the sustainability of the business undertakings and the industry's position in the business cycle should be the focus of regulatory decisions." Considering the state of the industry, the dwindling competition and the difficulties faced by new entrants to the market, the motivation for regulatory action should be the opening of the market to competition. Which leads us nicely to our second reading:

Regulation only where necessary

• The Commission, except where required otherwise by statutory obligations, shall, before deciding to impose regulatory obligations on undertakings in the market for electronic communications, examine whether the objectives of such regulatory obligations would be better achieved by forbearance from imposition of such obligations and reliance instead on market forces.

The relationship of the industry to the incumbent is like that story of the frog and the scorpion. You know the one: scorpion asks frog to carry him across the water, frog says no, worried that he'd be stung, but scorpion argues that if he were to do that he would be killing himself so frog agrees. Half way across scorpion stings frog. As they are dying frog asks why. Scorpion answers "It's my nature". It is the nature of a monopolist to exploit its position. You only have to look at the recent marketing of its retail sms service while witholding the wholesale service to see this. Now, even if Eircom comply with the direction to introduce an wholesale service, the damage is already done. There are umpteen other examples of this behaviour. You only have to look at BT Wholesale, which makes as much as BTs retail arm, to see how much this is damaging not only to the industry but to Eircom itself in terms of the company's long term viability.
The role of the Regulator should be to protect the incumbent from itself and to protect the industry from the incumbent. This is not to say that I'm in favour of continuous, draconian regulation. I agree with the concept of "regulation only where necessary" up to a point, and that point is when the incumbent steps out of line or the sustainability of the industry requires it regulation should be swift and effective. Considering this, I'd like to see the 5th Draft Directive changed to read "Regulation only where necessary, but where necessary regulation".

Lemme hear you say "Ay-MEHn"
Response: Ay-MEHn

dahamsta

... and in particular the industry’s position in the business cycle ...

<dahamsta scratches his head trying to figure out if this was a typo or rather cynical humour>

Oh: In The National Interest.

adam

Xian

Originally posted by dahamsta
<dahamsta scratches his head trying to figure out if this was a typo or rather cynical humour>


Ach! The Reverend Jelly Roll is thwarted by character encoding! (MacRoman -> Unicode). Let it stand - looks like one of Muck's E-Hub of Europe posts ;-)

Xian

Originally posted by Xian
the difficulties faced by new entrants to the market

viz.

Vartec slams Eircom and regulator
Sunday Business Post, December 15 2002

A new entrant to the consumer telecoms sector has slammed Eircom and the telecoms regulator for delaying its entry to the Irish Market.
US firm Vartec Telecom said it could have introduced its service two years ago but was forced into a series of negotiations with Eircom and the regulator.
Vartec offers discounted calls to consumers by buying call time from incumbent operators and offering it at lower rates. The company launched its service in Britain in 1999 and had hoped to expand into Ireland soon afterwards.
The service finally launched last week after several rounds of negotiation lasting over two years. "We faced many challenges in bringing this service to Ireland... We should have been able to offer this service two years ago..."
With no additional equipment, users just [dial a certain number etc.]

MDR

Would it be possible/appropriate to include a statement of concern along with this document, expressing IOFFL's very real genuine concerns that Eircom (calling a spade a spade here) in an attempt to protect its very lucrative revenue from residental internet minutes, is going to drag this through a long exaggerated court battle which COMREG may/may not be up for. and that in light of the battle the imputeus on the Ministers part might be lost, we need to reiterate then how fundamentally important FRIACO is for Ireland future ....

dahamsta

I think it would be very appropriate, in fact I would encourage it.

adam