Eircom, ComReg settle action on access cost

The High Court yesterday struck out a legal challenge by Eircom to a ruling by communications regulator ComReg that the company should allow rivals low-cost access to its local network, following an agreement between both parties. Barry O'Halloran reports

In May, ComReg directed Eircom to allow competitors rent lines on its local network, which links businesses and consumers to exchanges, for €14.67 per line per month. The telecoms company sought a judicial review of the decision, saying it was being forced to rent its lines to rivals at a loss.

The action was struck out yesterday after ComReg agreed to begin a review of the issue and to set a new price in April 2004. Both sides agreed to allow the current local access charge of €16.81 to stand, pending the outcome of the review.

The two parties yesterday issued statements confirming the deal, which was concluded after a period of negotiations involving their legal teams. Each side will cover its own legal costs.

News of the deal last night left Eircom's rivals divided. Its main competitor, Esat BT, hailed the outcome of the case as a victory for consumers.

"It's very good news," a spokeswoman said. "The bottom line is that Eircom was originally looking for €27. They agreed to an interim price of €16.81 and that is now fixed until next April."

She added that it was unlikely that ComReg's review would radically change this.

However, Mr Iarla Flynn, spokesman for the Association of Licensed Telecoms Operators (ALTO), said it was a disappointing outcome. "Effectively Eircom has won the day," he said.

Mr Flynn argued that the €14.67 charge which ComReg sought to impose would have allowed Esat and other operators to offer consumers lower prices, which would boost competition in the fixed-line market.

Mr David Long of Ireland Off-line, which represents small business telecom customers, said the deal had put the industry back to square one.

"It keeps the status quo and highlights the powerlessness of ComReg in these situations," he said, adding that the delay in resolving the issue would deter Eircom's competitors from developing low-cost products to offer to consumers and businesses.

Eircom sought the judicial review in May after ComReg issued its directive. In July 2002, the regulator began a process, involving the whole industry, designed to set a price for access to the local network. That was due to end in January of this year, but ComReg subsequently sought more time.

Eircom had asked that the issue go to an independent arbitrator but ComReg refused.

The regulator yesterday said it would issue a new decision as early as possible in the new year, and called for a constructive and reasonable approach from Eircom.

The company's commercial director, Mr David McRedmond, said it welcomed the fact that ComReg had agreed to begin a new process. He pointed out that the EU required local access prices to take into account the owner's costs and need to make a return to guarantee continued investment in telecoms networks.