INTERNET
Eircom stay baffles rival
05-06-2003
by Andrew McLindon
Esat BT says it is "mystified" by Eircom's High Court action against ComReg, which seeks to block the regulator's decision to cut local loop access charges.
Eircom secured a stay in the High Court on Wednesday to ComReg's directive issued on May 28, which would force Eircom to reduce the charges it makes its competitors pay to access to its local network. The regulator ordered that the charge should be EUR14.67, down from the current rate of EUR16.81, which was set last year.
It is generally thought that reducing local loop access charges will make it more profitable for competing telecoms operators to provide broadband connections to customers, which will be of benefit to Ireland as it struggles to catch-up with many of its European counterparts who have much higher broadband penetration rates.
However, Eircom claimed in its submission to the High Court that the regulator's decision will cost it "tens of millions of euro" in lost revenues.
Eircom also gave an undertaking in the High Court to reimburse everyone who had, during the stay, paid amounts over and above the charges set out in ComReg's directive if its challenge was unsuccessful. The case is likely to be heard at the end of the month.
Eircom declined to comment on the case.
However, Eircom's main rival, Esat BT, has said it is "mystified" by the legal action, while ComReg has vowed to contest it "vigorously."
Una McGirr, Esat BT's communications director, told ElectricNews.Net that the case did not make sense, as its actual impact on Eircom would be small. "The directive relates to broadband lines, of which there are, unfortunately, only 1,000 in the country at present. Our calculations are that at the current level this decision will cost Eircom around EUR12,000 per annum. Even if broadband usage was to pick up, the impact on Eircom's bottom line would be negligible as even in countries with high broadband penetration rates, around only 4 percent of lines are used for broadband," said McGirr.
Esat BT said on Wednesday that it would be cutting the cost of two of its business broadband services by 15 percent from 1 July. These cuts were made possible, said Esat BT, by ComReg's latest decision and the company confirmed to ElectricNews.Net that the price reductions will still go ahead regardless of the outcome of Eircom's High Court action.
For its part, ComReg said that it was "disappointed" with Eircom's decision to go to the High Court as it believed it could have an adverse effect on the development of and competition in the broadband sector.
An industry source suggested that Eircom's latest legal action may be a shot across the bow of ComReg as the regulator prepares to issue far more reaching directives on the telecoms market. "The feeling is that Eircom is not going to let any battle go, no matter how small, without a strong fight because if it didn't, it would set a precedent," opined one industry insider.
It is also thought that the Minister for Communications, Dermot Ahern, TD, who has always stressed the need for reduced Internet access charges, may now fast track the establishment of an appeals board for the communications sector. The board is designed as a way for ComReg and telecom companies to settle disputes without recourse to the courts with the board having the power to overrule decisions made by the regulator.
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