Comreg proposes to directly penalise Rural Ireland

IrelandOffline have analysed the Comreg document 12/63 “Price regulation of bundled offers” in one of their interminable consultation extravaganzas. This is where (their words): “ComReg has gathered further data to help it understand better whether different structural conditions of competition are in fact evolving in different locations across Ireland”. Having abandoned rural Ireland to sub-standard 4G coverage Comreg now proposes to abandon the same consumers for broadband.

Comreg basically  propose to allow eircom to “compete” in selected urban areas and at the direct expense of rural consumers. In these selected urban areas  no line rental (currently over €26 a month nationally) is to be paid and this measure will inevitably lead to a rebalancing of the Line rental pot to ensure that Rural areas make up the shortfall. Line rental in Rural and Suburban Areas could reach €40 a month by 2014 if this proposed measure is enacted.

Eamonn Wallace, chairman of IrelandOffline, commented : “We in IrelandOffline wonder what exactly this has to do with “bundled offers”. The Comeg analysis was conducted despite the  complete lack of a Regulatory Impact Assessment of any sort whether beforehand or as part of the overall document. “

Comreg are engaged in a highly deceptive attempt to hide an extremely important consultation under an innocuous sounding title in the hope that nobody will notice. In this document they attempt to define what they term a “Larger Exchange Area”, a euphemism for urban areas and as such should be termed “Urban Area Exchanges” (let’s call a spade a spade)”

Wallace continued: “Tinkering around with regulatory details in urban areas will not alter anything. Compared to cable, eircom no longer have a competitive copper-based product no matter what the price. UPC will continue to eat eircom’s lunch1 until eircom introduce a fully fibre to-the-premises product that is capable of delivering true triple play and at least 100Mb/s speeds and at a competitive price.

Wallace added: “In the meantime it is not the job of hard pressed rural customers to pay for the consequences of over a decade of bad regulation. ComReg should not force rural customers to pick up the tab for eircom’s bondholders where eircom’s urban customers are no longer prepared to pay exorbitant prices and have access to superior alternatives. It is  now too late, the market analysis is utterly farcical and the micro market definition by Comreg won’t improve anything. In fact it will dramatically reduce investment overall given that Comreg are now reserving the right to define a micro market in favour of eircom anywhere they choose and at any time. That is a measure of  how utterly disreputable this piece of regulation is.”. .

Wallace finished: “In regulatory Terms what Comreg are doing is showing up after the Titanic has sunk and finding that there were insufficient lifeboats to tow the Iceberg out of the way. We all agree that it would have been a good idea to tow the iceberg out of the way but that is not really the point, is it?

ComReg’s logic will inevitably lead to the progressive regulation of UPC’s prices upwards to protect eircom from the consequences of its own greed and from the utter failure of the regulator. This despite the fact that no  Market Analysis of overall Urban Broadband (or Rural Broadband) has been carried out and despite the fact that UPC have never been found to have a dominant position in any Market Analysis conducted according to EU Law.”

We quote the BT Ireland response to the consultation : “Digital divide and Government policy” – “We believe that ComReg’s proposal is detrimental for Irish rural communities, not only will they have slower broadband services, this proposal will create the situation where it is highly likely rural communities will also pay higher prices relative to urban areas for the lesser service. ComReg has a policy objective to ‘promote the interest of users within the Community’ however we believe that for the rural areas this proposal will not do that.”

We agree wholeheartedly with the BT analysis and feel this badly formed ‘own initiative’ consultation is merely designed to prove that there is competition in the telecommunications market even though it proceeds entire from the assumption that it is the wrong form of competition and that eircom need a digout.

1http://www.irishtimes.com/newspaper/breaking/2012/1105/breaking26.html