Eircom has accused the regulator of stifling investment in the telecoms market and has rejected a proposal to split it into separate retail and wholesale companies.
It has also called for a radical change in the way the Commission for Communication Regulation (ComReg) regulates the telecoms market to encourage operators to invest more.
The firm's recommendations are contained in a lengthy submission on regulatory strategy made to ComReg called Eircom's Forward Looking Strategic Review of the Irish Telecoms Sector. It describes a proposal by ComReg to split the firm as "undesirable" and warns it could "undermine investor confidence" in the fixed and mobile telecoms sectors.
ComReg recently floated the idea of separating Eircom into two separate companies in a bid to increase competition in the telecoms sector. However, the regulator has acknowledged that this separation strategy would not provide a quick or easy solution.
Eircom's formal response to the proposal concludes that it would be likely to prove undesirable on cost/benefit grounds even if it were quick and easy.
Instead of considering the structural separation of Eircom, the firm says ComReg should allow regulation to be focused on "non-replicable assets or services" and leave enforcement of other areas to the Competition Authority.
Eircom also expresses serious concern about the approach taken by ComReg to the consultation process. It describes the consultation methodology and time-frame as "totally inadequate" and says it seems to be designed to disallow rather than embrace the views of industry stakeholders.
The firm's executive summary warns that an unintended consequence of regulation that was excessively focused on the "rear-view mirror" would be to slow innovation.
Providing access to Eircom's infrastructure at excessively low prices would also slow these desirable developments, it argues.
Instead, Eircom says ComReg should adopt the principle "primum non nocere", or "first do no harm", in relation to its regulatory strategy.
It should also commit to market-based triggers for the removal of regulation. This would enable investors to understand how regulation will change as the telecoms market develops, the firm says.
However, Eircom is concerned that ComReg will not change its current regulatory model. The firm criticises the lack of a proper economic analysis in the regulatory consultation process and publishes an economic paper that it commissioned from UCD's economics department.
Eircom warns that the Government's investment in telecoms infrastructure through the construction of fibre in 122 towns could effectively chase telecoms capital out of the Republic.
There is no evidence that this is a response to a lack of private investment; indeed if it was, this would raise the question of why a regulatory framework would provide inadequate returns for investment, says the report.
"The Irish Government and ComReg should make a virtue of the fact that in an equity-funded model government funds are not required, provided the fact that shareholders have a choice about where they invest their funds is recognised," says the document.
