Ground Floor Sheila O'FlanaganIt seemed like every second phone call I received last week was from someone trying to get me to change my landline provider. The basic premise of each pitch was that the new provider would give me cheaper phone calls and I could spend my time happily chatting to friends all around the world without racking up the kind of phone bill that leaves you reeling.
But the truth is that I haven't the mental strength to talk about phone bill plans. Comparing price plans takes up more time than it's worth because, quite frankly, you need a maths degree to work them all out and in the end, you're really not sure whether you're better off by switching anyway. In my case, the call charges don't drive up the cost of my bill. They're almost an afterthought. It's the fixed charges like line rental that account for most of it.
As far as the mobile goes, you'd need a PhD to figure out its price plan. I've no idea what one I'm on these days - I don't think it even exists any more, long since replaced by something else that means nothing in the grand scheme of things. Free minutes, free texts, free media messaging - all I really want to know is how much a particular call costs and is there a cheaper way of making it! But every time I ask that question, I drown in a sea of even more price plans.
Whether more clarity would result from the new rash of activity in the sector is doubtful. Changes in ownership might be welcome, but for the consumer probably means very little. And neither the Swisscom interest in Eircom nor the Telefonica deal with O2 have got telecoms analysts into a lather of excitement either.
Most analysts think that both operators are likely to have overbid. In the case of Swisscom, the general feeling is that the company can refinance Eircom's debt, thus saving a bundle of cash. But most of them are sceptical that there is much money to be made in the Irish market since there isn't the growth potential of places such as eastern Europe. So the deal appears to be a financial one rather than one based on any great interest in developing the domestic market. Which means that although the Eircom employees (through their share ownership plan) and the directors of the company stand to profit from the deal, there isn't very much on the table for the customer. Swisscom might take a proactive view on rolling out broadband, an area where we lag behind the rest of Europe, though - like Eircom - it has been accused of abusing its dominant position in allowing access to its infrastructure.
I wonder about the long-term future of landline providers in the private customer arena. The reason my call charges are such a low proportion of my bill (excluding the fact that line rental is ridiculous and that, having subscribed to broadband early I now pay more than recent subscribers!) is that I don't make that many calls on the landline any more.
And, given that I'm paying for broadband, I know that some day in the future I'll start using VoIP. At the moment, you may have to be at your computer for it to work, but it'll surely only take a little more time to become mobile.
And eBay, which recently ponied up $4 billion (€3.38 billion) for online telephony leader Skype, obviously thinks that VoIP is the way forward too. Right now, Skype has over 57 million registered users, although it's unlikely that any of them have actually binned their phones yet. Analysts are currently holding fire over the eBay purchase, but it's a challenge for the telecom industry, both fixed and mobile. In the past year, all the main fixed-line providers have shed staff.
Deutsche TeleKom recently announced the axing of a net 19,000 jobs; France Telecom has lost 37,000, and BT shed 5,300.
Those same analysts aren't enthralled by the Telefonica bid either though, at £17.7 billion (€26.33 billion) and putting a 22 per cent premium on O2's share price, it's one of the old telecom glory days kind of bids - the second-largest all-cash offer in the history of telecom bids and the kind of price designed to blow all opposition out of the water (despite the fact that Telefonica immediately traded down to a one-year low). The market is uneasy regarding the Spanish firm's plans to finance the deal in the longer term. Some traders suggested Telefonica would have been better off giving some money back to shareholders rather than trying to look macho in its pricing - others feel that paying 18.4 times projected earnings is 'reasonable'.
This deal may, however, give something back to consumers since Telefonica doesn't have a foothold in UK, Germany and the Republic, O2's business base. The hope is that it will offer cheaper handsets and greater roaming savings for customers throughout Europe.
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