Eircom to make legal challenge to line-share price cut

EIRCOM IS seeking to have the communications regulator's decision to impose a 65 per cent price cut on one of its wholesale products overturned by the Commercial Court, writes John Collins.

The telecom provider's solicitors will go to court on Tuesday looking to have the matter admitted to the Commercial Court. The case will not get a full hearing until the courts return from their summer break.

The case relates to local loop unbundling (LLU) line-share, a wholesale product which enables other telecoms providers to offer broadband over Eircom lines without having to provide a voice telephony service.

Until ComReg delivered its decision last month, Eircom charged other telcos €8.41 per month for each line. The regulator directed this should be reduced to €2.94.

It is understood that Eircom will maintain ComReg set the new price by looking at the average price in other European countries. Eircom believes the price should be based on an analysis of the costs of operating a network in Ireland.

Other operators have expressed disappointment at Eircom's move. Chris Clark, chief executive of BT Ireland said: "BT Ireland has a considerable demand for its broadband services based on LLU. In anticipation of certain regulatory outcomes we have made a significant investment in LLU and further investment was planned.

"It is regrettable that legal action has been taken on this matter. Legal action only results in uncertainty and this is bad for consumers and bad for competition."

ComReg is carrying out a broader industry consultation on how Eircom should be allowed calculate the monthly LLU charge to other operators. The closing date for that consultation is August 22nd. Once the model is agreed a broader price review will take place. It is understood that Eircom is fully engaging with that process.

ComReg's pricing decision was an interim one, but it is understood Eircom will provide the product at the new price until the matter is resolved.

Since the Government scrapped the Electronic Communications Appeals Panel last summer, telcos unhappy with a decision by the regulator have to appeal them to the courts.

LLU is a mechanism that allows newer entrants to the telecoms market to compete with incumbent operators who control a nationwide network.

Its introduction was mandated by the EU and it has been successful in increasing broadband penetration in some other European countries, notably in Britain.