ComReg in spotlight as cable firms plan to sue

molinaalexis

NICK WEBB

NTL and Chorus, the State's largest cable TV companies, are set to sue Etain Doyle's regulatory body ComReg about alleged overcharging. Legal action will commence against the Department of Communications, if ComReg does not respond by a deadline of tomorrow.

Chorus's 50 per cent shareholder, Independent News & Media's (INM) chief operating officer Gavin O'Reilly, said, "Nobody wants to go to law, but it seems our hand has been forced by indifference and inaction."

This case is separate to the legal action that Chorus is prosecuting, often touted as the "100 million" case, which relates to a long-standing compensation claim over the State's failure to uphold and police "exclusive" licences awarded to Chorus.

This latest landmark legal action could have massive ramifications for State-

appointed regulatory bodies. Ireland is now one of the most heavily regulated countries in Europe, with civil servants appointed to oversee the aviation, electricity, taxi and gas sectors. However, the ComReg regulators have been accused of overstepping their mark, and indeed contributing to increased consumer bills.

NTL and Chorus argue that the levy to ComReg is extreme, far exceeding the cost of regulating the licences. The companies, both loss-making, must pay 3.5 per cent of their sales to ComReg, which is by far the highest levy on cable operators within the EU. Combined, it is believed, NTL and Chorus have sales of approximately €150m.

The cable companies contend that the legislation establishing ComReg does not entitle that body to make profits. Chorus and NTL believe that these excessive charges amount to nothing more than a further tax on them, which makes them uncompetitive, specifically against British satellite operator Sky.

O'Reilly added, "A regime which profits by over-taxing struggling cable operators is lunacy."

Apart from excessive fees, Irish cable companies are also hamstrung by the breaks extended to Sky. Despite broadcasting a dedicated Irish signal into Ireland, Sky is actually not regulated by ComReg or any other State body. This means that, unlike NTL and Chorus, Sky - controlled by News International, the massively wealthy media group - does not have to pay the 3.5 per cent levy to the State.

Claiming to "operate outside" of Ireland, Sky also does not pay VAT to the Irish

Exchequer, but instead pays a lesser rate of tax into British coffers. Based on a turnover estimated at €190m, the differential VAT lost to the Revenue exceeds €6m annually. In effect, Sky gets access to the lucrative Irish market without having to pay money to the State.

It also appears that the State facilitated RTE's uplink to the unregulated Sky satellite platform last year.

O'Reilly said, "It's sad to admit it, but we have a profoundly unhelpful regulatory regime . . . First, it appears to profit itself at the industry's expense. Secondly, far from ensuring a fair and open market, it manages to produce quite the opposite.

"As a consequence, indigenous operators and Irish jobs are threatened by an unregulated and unobligated operator like Sky."

Chorus and NTL together employ about 1,000 people in Ireland directly, and over 1,000 indirectly; Sky is believed to employ less than 15.

Last week, it was reported that NTL's Irish operations might be up for sale as frustration with the over-regulation of the market reaches a head. The company, formerly Cablelink, has denied this.

Cablelink was sold to NTL in 1999 for €674m. INM has also indicated that its stake in Chorus is a "current asset" - a sign that it too may be trying to orchestrate a sale.

However, the highly competitive Irish TV market, the collapse in stock markets and the gloomy outlook for world economies mean that any price tags will be a fraction of what was seen only two to three years ago.

O'Reilly added, "We make no apology for prosecuting our entitlements . . . all we've ever asked for is transparency and a level playing field. Nothing more. Nothing less."

SkepticOne

This article is from the Sunday Independent which is owned by Independent News and Media and whose CEO, Gavin O'Reilly, is quoted in the article. Independent News and Media has a 50% stake in Chorus.

Gavin O'Reilly's father, Sir Anthony, has £100m invested in Eircom which is also complaining about regulatory costs.

DeVore

Wow, they dont call you ScepticOne for nothing eh?

Its all fúcked.

DeV.

Slutmonkey57b

O'Reilly added, "We make no apology for prosecuting our entitlements . . . all we've ever asked for is transparency and a level playing field. Nothing more. Nothing less."

Those O'Reilly people are Un Be Fu Cking Leivable. This country would make me laugh if I weren't so busy crying blood.

dahamsta

Didn't somebody here the other day say it was .5%? Which is it?

adam

STaN

also where are these charges documented and are they only for the main telco's or right down to bandwidth resellers?

kamobe

Chorus and NTL together employ about 1,000 people in Ireland directly, and over 1,000 indirectly; Sky is believed to employ less than 15.

Nice the way they leave out the people sky indirectly employ, ie the ppl all over the country who install their dishes....

STaN

Originally posted by kamobe
Nice the way they leave out the people sky indirectly employ, ie the ppl all over the country who install their dishes....

outsourcing.... They work for themselves as far as i know. Sky pay them per install.

SkepticOne

Originally posted by STaN
outsourcing.... They work for themselves as far as i know. Sky pay them per install.

Yeah, Sky have generated a lot of employment in Ireland. Not directly but via contractors.

saik

yeah damahsta.
iirc it said eircom pay .5 pc

so is it telcos like eircom and esat paying one rate,
and cablecos like ntl and chorus paying another?

or is something being mis-reported.
i'd believe a newspaper report before an internet post, but it's not a whole lot more credible, esp considering the vested interests.