Further Input to Consultation Document No. 09/39 on Local Loop Unbundling (‘LLU’) and Sub Loop Unbundling (‘SLU’) Monthly Rental Charges

In response to:

Comreg Note “In Consultation Document No. 09/39, ComReg expressed the preliminary view that 1,600 lines represented a highly conservative point at which to draw the boundary between those exchanges that are considered viable for unbundling during the control period (large exchanges) and those that are not (small exchanges).

ComReg now believes that a threshold of exchanges containing at least 2,500 lines is appropriate because:

In operator responses to Consultation Document No. 09/39, the majority of operators believed that a cut-off of 1,600 lines was inappropriately low. A number of the operators indicated that the cut-off point should be raised and suggestions included 2,500 lines, 3,000 lines and 5,000 lines ”

Question 1 “Do you agree that exchanges with working lines in excess of 2,500 is currently a reasonable threshold for those exchanges that are likely to be economically viable for OAOs to unbundle in the next three years? Please state the reasons for your response. ”

We in IrelandOffline believe that the fixed cost stack that any operator is subjected to within an unbundled exchange is onerous. The years of prevaricating with shared and full LLU monthly rentals, though ongoing, has failed to see this cost stack addressed .

It is grossly unrealistic to assume that Comreg will get its regulatory mix right in the next 3 years and IrelandOffline is strongly of the view that only the approx 100 largest exchanges Nationwide and with c.4000 lines or greater right now will be on the LLU agenda over the next 3-5 years.

We shall additionally tell Comreg in our imminent response to the NGN consultation that the provisioning of redundant NGN backhaul from each of these 100 exchanges must be an explicit priority for Comreg in any NGN strategy over that time amongst other explicit policy objectives .

This has already been done in many cases but stakeholders need an explicit commitment to complete this task from Comreg in order to have any certainty .

Such a commitment will also benefit the deployment of Metro Ethernet from these locations over that time-frame, once Comreg have concluded what Metro Ethernet actually is and reduce their inevitable “permaconsult” phase of c 3-5 years to a more realistic time-frame.

Question 2 “Given the current level of take-up of LLU in Ireland to date, the economies of scale referred to above, do you believe that, among other things, the current price of LLU plays a significant role when considering investing in LLU in the future? Please state the reasons for your response. ”

The take up of LLU/SLU has been pathetic, especially compared to later starters like France and the UK and the blame for this must be laid squarely at the door of Comreg.

We in IrelandOffline believe that this “painful drip of permaconsult but do nothing” is of more significance. Comreg started to consult on LLU in early 1999 and are still asking the same utterly basic questions of the stakeholders, however not actually doing anything of consequence. The dead weight of regulatory inertia weighs heaviest of all. Rather than asking these questions, an explanation from Comreg for their myriad past failures is long overdue. We may then find out whether Comreg has actually learnt anything since 1999.

Question 3 “Do you agree with ComReg’s assessment that the recent declines (even though these declines have been faster than anticipated since the publication of Consultation Document No. 09/39) are largely a short-term phenomenon for the reasons set out above? Please state the reasons for your response. ”

We in IrelandOffline also note that the Comreg observation “ComReg expressed the view that this decline (in Fixed lines) was a short-term phenomenon and that it would stabilise in 2010. New data is now available which shows that the decline in working lines has been occurring at a faster rate than was previously anticipated.”

We in IrelandOffline believe that this phenomena will not stabilise in 2010 , the cost of basic line rental together intermixed with the appalling levels of service and fault clearance to which fixed line customers are subjected, will inevitably mean that mobile usage and reliance thereupon will grow .

Comreg have signally failed to note that almost a QUARTER of all fixed lines are now paid for by the state through social welfare schemes and that there is a considerable risk that these schemes will be withdrawn or capped before 2010 or during 2010 thereby leading to a yet more precipitous decline in fixed line penetration .

We would consider that in light of the high fixed costs that an averaging down of fixed lines from c.1.6m to c.1.2m is a wise assumption by end 2011 . If the social welfare schemes are withdrawn or severely curtailed one could knock another third off that assumption again ….thereby leading to a halving of working lines from c.1.6m to c.0.8m in around  3 years.

An illustration of this effect is that a basic broadband package (1Mbs) still costs upwards of €45. This is the most obvious reason for the decline in fixed line provision when compared to basic mobile midband solutions. If fixed line telecommunications companies are to be “rescued” and the hemorrhaging of lines stemmed then a more realistic pricing mix is necessary .

Question 4. “What do you consider to be the appropriate minimum speed that should be available before you unbundle a particular line? In addition, please provide your definition of a broadband line over the fixed network. ”

We in IrelandOffline believe that a minimum 512k is required TOGETHER with a reasonable SLA (from eircom) that requires that the line be maintained in such a way that this speed is not allowed to degrade over time from lack of maintenance. We further believe that line outages are to be repaired in a timely manner, unlike the present situation. We are indifferent as to whether the package delivered is xDSL or Ethernet or by any other means.

In saying that we assume line lengths in the typically urban areas where the 100 largest exchanges are located will generally support 512k . In the other 1100 exchanges nationwide which tend to me more rural and where only Bitstream product will be available we would consider 256k an appropriate minimum owing to longer average line lengths.

Question 5 “Do you agree that the existing ComReg methodology for calculating price trends, as set out in section 4.48 of Consultation Document No. 09/39, remains appropriate in determining the final LLU charge? Please state the reasons for your response. ”

Yes. It has taken years for Comreg to look at the “efficient operator” scenario. The current situation where Comreg has long tolerated the Highest Line Rental in the World is utterly counter productive and is inimical to all stakeholders in Ireland …even to eircom at this stage.

It is a structural legacy from the Telecommunications companies obsession with “recurring revenue” (and endeavouring to service the debt mountain) that characterised the post dot-com bubble period in the early part of this decade.