Energis urges break-up of Eircom

Telecom firm Energis has called on ComReg to break up Eircom, arguing that the former State monopoly's dominance of the market is damaging the economy.

In a submission to ComReg's ongoing review of the sector, the company said Eircom's retail unit should be separated from its networks division in order to stimulate investment in the network and foster fair competition in the industry.

Behind Eircom and BT Ireland, Energis is the third biggest fixed-line operator in the market. The company has annual sales of some €43 million and annual earnings before interest, tax, depreciation and amortisation of about €1.3 million.

Energis claimed that Eircom's access to its network gave it lower costs and more control of the standard of service it provided and the service its rivals provided.

This led to under-investment in the sector, it said, arguing that network investment in new technologies was half that of Britain, France and Portugal.

"The strategy of the monopoly is to maximise short-term shareholder profit at the expense of long-term growth. This 'dividend play' places cash that other countries are spending on upgrading their assets into the pocket of a small number of shareholders.

"The incumbent will continue to defend its position against all threats," it said.

"The only way we can increase competition in the market is through all operators having equal access to the national infrastructure. Eircom has not provided equal access in the past and we should expect that they will continue to deny equal access in the future."

Energis said that a separation of Eircom's network business from the retail unit would ensure that Eircom's retail operation competed on a fair basis with the rest of the industry.

Stating that such a structure had worked the US telecoms market and in the Irish and British electricity markets, Energis said this would allow one entity to invest in a reliable well-maintained network.

It said a single national network with equal access to all service providers was the most efficient way to create and deploy investment in the network.

"Experience in the US would also suggest the split entity has a real chance of delivering improved value for shareholders."