ComReg tells Minister line rental policy not appropriate

The Commission for Communications Regulation (ComReg) has told the Minister for Communications, Mr Ahern, that aspects of his latest policy direction on line rental might not be appropriate and would take a long time to implement.

In a published response to the Government's draft policy direction yesterday, ComReg outlines specific concerns with Mr Ahern's proposal to force it to set a cap on Eircom's line rental charges if competition is not introduced to the sector by June.

Mr Ahern published his draft policy direction to ComReg last month following the furore caused by Eircom's decision to increase line rental charges for the third time in 12 months.

The core aim of the policy direction is to facilitate the introduction of competition in line rental, which until now has only been available from Eircom. Despite beginning talks on the introduction of wholesale line rental products in mid-2002, ComReg has been unable to obtain agreement between Eircom and its rivals.

In its paper, ComReg says consideration needs to be given to extending the June deadline set by Mr Ahern for assessing whether the introduction of wholesale line rental is successful.

The experience of other comparable products suggests that operators take a number of months from the introduction of the service to familiarise themselves with its workings and deploy marketing and sales efforts, says the regulator.

Wholesale line rental is a key product that will enable Eircom's rivals to supply line rental services direct to consumers. This will enable residential customers to obtain a single bill for all telecoms services provided by firms.

Despite criticising certain aspects within the policy proposals, ComReg welcomes "ministerial support in driving competition" in the text of its response to Mr Ahern's policy direction to the regulator.

The paper also shows that ComReg is proposing that Eircom reduces the proposed transfer fees (or administration fees) which it levies on rivals that win a customer. It is proposing a once-off fee of €9.16, a substantial fall from €24.61.

Competitors to Eircom had argued that this proposed charge was too expensive and was preventing them from taking up wholesale line rental. They have also argued that the proposed 8.5 per cent retail margin on the wholesale line rental (that is the price that rivals pay to Eircom to rent the line from it) is inadequate.

ComReg says it is in discussions with Eircom on the appropriate level but warns the Minister that recent press coverage on the line rental issue could make it more difficult to achieve agreement.

"Expectations on certain aspects of the product, including pricing/margin, have risen significantly following recent press coverage and may make reaching agreement on some of these more challenging," it says.