Eircom plans to have mobile strategy in 2005

Eircom will have a clear strategy on how it will enter the mobile market by early next year, according to chairman Sir Anthony O'Reilly. He indicated that one option could be the acquisition of Meteor, the third mobile operator.

"This ain't the long-finger exercise," he said, adding that the company was examining all available options to enter mobile telephony and believed if it did so it could bring down the cost to customers substantially.

Eircom can enter the market by buying a competitor, building its own network or piggy-backing on an existing network. The company complains that under current regulatory rules it cannot get access to Vodafone's and O2's mobile networks at a reasonable cost. If it could do so, then Eircom could become a mobile virtual network operator (MVNO) by offering its own service and paying a percentage to one of the network providers.

The current regulatory regime was "very unfair" because it obliged Eircom to open its network to competitors at cost, but did not allow it access to other company's networks on similar terms, said Sir Anthony, speaking after the company's annual general meeting.

If Eircom could get access to a mobile network at a reasonable price "we will give you the Ryanair of mobiles," he added.

Company chief executive Mr Phil Nolan said he believed that the telecoms regulator had the power to introduce changes to the market which would be "extremely helpful to Eircom," in its desire to re-enter the mobile market. However, whether the regulator would do this was another question. A consultation process with the regulator is due to come to fruition in November, he said, and the company feels that this will help to clarify its options.

Sir Anthony also clearly signalled that an acquisition of the smallest mobile operator - Meteor, owned by Western Wireless - was a live option. If Meteor's owners were realistic and prepared to see that a joint investment could increase its current market share from 3 per cent towards 20 per cent, then a deal could be done which would benefit everyone, including consumers, he argued. Meteor's value to a company like Eircom would partly depend on the regulatory regime, he pointed out, with the price it would pay falling the more the option was open of piggybacking on another network.

Building a new mobile network seems the least likely option for Eircom to pursue, given the expense and length of time involved. However Mr Nolan was adamant that a return to the mobile market was on the way.

"We are a commercial company and we will find a commercial way of doing something," he said.

Both Sir Anthony and Mr Nolan were highly critical of telecoms market regulation since liberalisation.

A poor regulatory environment had seriously hit the development of cable in Ireland, Sir Anthony said. Cable would never be a competitive force in the wider telecoms market "because the regulator buried it," partly by freezing the price that NTL and Chorus could charge customers.

"Zealotry and ideology have played too large a part" in regulation, according to Sir Anthony. No politician is going to stand up for Eircom, he said and the regulator sees "no political mileage" in addressing the company's concerns.

Eircom believes that this is part of a lack of clarity and direction in the Government's overall approach to the telecoms sector. Regarding the contentious issue of broadband provision, Mr Nolan says that around 80 per cent of homes can eventually be connected economically, but that connecting the remaining 20 per cent will never yield a commercial return.

However, the company criticised the Government's approach of building fibre rings around some major towns to provide broadband, saying that in many instances this is duplicating Eircom investment. A more efficient approach could have been developed, Eircom believes.