ComReg's Goggin takes the tough-guy approach

Barely a week after taking the post of chairwoman of the expanded Commission for Communications Regulation (ComReg), Ms Isolde Goggin finds herself at the centre of a firestorm of criticism, writes Jamie Smyth, Technology Reporter

ComReg's ruling last week to force open the networks of O2 and Vodafone for use by "virtual operators" provoked threats of appeals and legal action from the firms, which together hold 94 per cent of the mobile market. Even the two smaller operators, Meteor and the Hutchison Telecoms brand 3, have slammed the decision, the latter warning ComReg it may reconsider its Irish strategy.

But Ms Goggin, an ex-Telecom Éireann and Ericsson employee and former member of the Competition Authority, is unrepentant and in no mood to express sympathy for new entrant 3, which could face extra competition before it sets up its service.

"Our job is to be fair to consumers not the industry players," she says. "And we have added sweeteners for both Meteor and 3 in the decision by copperfastening their existing national roaming agreements. This will offer them greater stability."

Meteor is currently piggybacking on O2's network to provide coverage in limited rural areas while 3 has agreed to use Vodafone's network to supply voice services when it launches.

These roaming deals will enable both firms to be more competitive in the market and should help them to reduce Irish mobile prices in the long run. But ComReg's ruling on "virtual operators" could open the door for many new players to gain a foothold in the market and dramatically increase price competition.

Ms Goggin argues that the market needs the rapid introduction of this kind of competition to reduce prices for consumers now. The alternative would be to wait several years before new wireless technology is deployed to compete with mobile firms.

Unsurprisingly, the four Irish mobile firms want the ruling reversed as they sense an imminent threat to their profit margin.

"I expect that they [ Vodafone and O2] will appeal the decision to the European Commission... We know that they have been in talks with officials in Brussels about the consultation document we issued this year."

Ms Goggin says ComReg has also been in communication with the Commission "to help it understand its thinking" but she refuses to comment on whether Brussels will sanction the ruling.

Under the European regulatory framework, Brussels must sanction the ruling within three months or send it back to ComReg to be amended. And even if it passes Brussels, the mobile firms could tie up the decision in multiple legal actions.

But if Vodafone and O2 think that the potential entry of "virtual operators" is their only regulatory concern, they had better watch out for another decision due from ComReg next January.

"We think that the prices that mobile operators charge fixed telecoms firms to terminate traffic on their network is just too high," says Ms Goggin, who says that regulatory action is being proposed to cut termination fees.

The high termination rates charged by mobile operators to fixed operators pushes up the prices for consumers using their home phones to call mobiles, according to ComReg, which could introduce a price cap in a similar manner to the way it regulates some of Eircom's prices.

"You'd have to hope that, in the end, we don't need to be in the market regulating but at the minute the Irish market is quite unusual in that the two biggest operators hold such dominance."

Despite the spotlight focused on the mobile sector over the past few weeks, ComReg has recently taken important decisions on the price at which Eircom must open its network to rivals.

ComReg's decision to set a monthly price of €14.65 to access Eircom's local loop to offer broadband and voice services has provoked criticism from rivals, who note that this is among the highest monthly fees in Europe.

The European Commission referenced this fact in its recent 10th Implementation Report on Telecommunications, which also noted that a mere 305 lines had been "unbundled" in Ireland.

Ms Goggin says that the unusual demographics of the Republic have contributed to the relatively high monthly charge for unbundling - a key requirement to promote innovation in the broadband market.

"One-off housing imposes higher costs for network industries... In other countries, a rural location means 1,500 people in a village but here it is a single house," she says.

ComReg is also proposing to force Eircom to offer line-sharing services (here rivals take control of part of Eircom's local access network to provide broadband but not voice to customers) at a cost of €0.39 per month, down from the current price of €9.

This is likely to be seen as a far more attractive option by rivals but may be opposed by Eircom.

"That is the price we have set and if they challenge it then so be it," says Ms Goggin, reflecting a more combative approach now being taken by the regulator.

But ComReg's new tough-guy image still needs a stronger legislative back-up to help it regulate.

Ms Goggin and fellow commissioners Mr John Doherty and Mr Mike Byrne want the government to introduce powers to enable ComReg to levy civil fines on errant operators. They also want the reinstatement of criminal fines worth up to 10 per cent of a firm's turnover on indictment.

"In complex issues of economic theory, it is often very difficult to prove an issue beyond a reasonable doubt and, therefore, we would like the power to levy civil fines," says Ms Goggin, who nevertheless defends ComReg's record in creating a competitive market since it was set up in 1997.

"I think the regulation of the whole sector is in transition. Phase one was from 1987 to 2002 when we had the tough job of bringing in competition and making it work. The second stage is more of a fine balancing act as we see regulation working, we can withdraw from some sectors, while intervening in others."

Whether this transition is successful will now depend on the mobile operators, the European Commission and the courts.