Sky's voice service is a wake-up call for Eircom
Whoever is being lined up to replace Paul Donovan as Eircom’s chief executive must have groaned after BSkyB’s announcement yesterday that it will begin offering broadband and voice services here in time for Christmas.
This is a significant development. Sky has deep pockets and leaves most of its competitors in the shade when it comes to consumer marketing.
It also happens to have 693,000 satellite television subscribers, according to the latest figures from research group Nielsen. This is a good starting point from which to launch a triple-play offering of TV, broadband and phone services here.
Sky is no novice, having entered the UK telecoms market in 2006.
It has been mulling a similar move in Ireland for years but was always put off by what it considered to be the high costs of wholesaling and the fancy price tags that telco owners wanted for their businesses during the property bubble.
The Irish boom has turned to bust and the competitive landscape has changed to the extent that Sky is now able to agree a wholesaling deal with BT Ireland.
It has yet to show its hand on pricing but we can assume it will be competitive.
Sky’s Irish pay-TV rival UPC has enjoyed considerable success by expanding into broadband and voice.
It invested about €700 million in upgrading its network at a time when Eircom was paralysed by its debt mountain. UPC now has 273,000 broadband and 187,000 phone subscribers, largely mined from its TV subscribers.
Sky will be hoping to emulate this success as part of a wider move to grow its business in Ireland.
In February, the Rupert Murdoch-controlled broadcaster announced plans to recruit 800 staff here for a new customer contact centre. That figure has since risen to 900 and, I’m told, could yet hit 1,000 over the next 18 months or so.
This is good for the economy and consumers. But it’s not so good for Eircom, which will now have another major competitor to deal with while trying to downsize its workforce and invest €1 billion-plus in a fibre-optic network, as per the agreement worked out with bondholders during its recent examinership.