High-tech hub idea recedes

The Republic's continuing failure to provide low-cost access to telecommunications mocks our pretensions to become an "ecommerce hub" or what the Taoiseach Mr Ahern has referred to as a "high value added, knowledge society".

A variety of indicators suggest that the Republic may be in the rear of Europe's information society, with limited access to even basic Internet and telephone services.

The State's plans for more advanced services, such as broadband Internet access and third-generation mobile phones, are yet to become a reality. The Republic is deregulating its telecoms market, as it is bound to do under EU law, but progress is slow.

In this context, the decision of Mr Justice O'Higgins in Meridian v Eircell was a major victory for Eircell and a disaster for Meridian shareholders and employees, but it may have significant implications for how the Irish telecoms market is regulated in the future.

Although Meridian had sued Eircell unsuccessfully for a variety of breaches of contract and torts, a key element in its claim was its allegation that Eircell held a dominant position in the market for mobile phone services within the Republic and that Eircell was abusing that position by refusing to allow it resell discounted mobile phone services to the public.

Mr Justice O'Higgins's decision that Eircell did not hold such a dominant position in the mobile phone market means that the High Court could not and would not control Eircell's business practices by invoking the Competition Act. This decision stands in contrast to the finding of the Office of the Director of Telecommunications (ODTR) in December 1999 that Eircell and Digifone have "significant market power" (SMP) in this market.

Mr Justice O'Higgins held that this finding applied only to telecoms regulations and was irrelevant for the purposes of competition law. Furthermore, much of his judgment focused on developments in the market in 2000. A finding of SMP is very important, and will become even more so when the proposed Communications (Regulation) Bill is implemented.

Operators with SMP may be forced to open their networks to access by third parties and provide facilities such as mast-sharing. In any future adjudication on SMP, Eircell may well argue that as the High Court has held that it does not have a dominant position then it cannot have SMP.

A serious problem in the Irish telecoms market is that it is unclear who ultimately has control of its regulation. There are a variety of different agencies and institutions involved, ranging from the ODTR to the European Commission. The Communications (Regulation) Bill should end this problem once it is implemented. This will create a Commission for Communications Regulation, which will have more extensive powers and greater independence than the existing ODTR.

It will provide for three member appeal boards where individuals aggrieved by decisions of the board can apply for redress. Disputes such as Meridian v Eircell might also be dealt with by the Commission instead of going to court. But if Eircell was to be designated as having SMP then, under the Bill, the Commission could simply order it to continue to provide Meridian with access to its mobile phone services.

However, appeals to the courts will still remain.

Denis Kelleher is a practising barrister and co-author of Information Technology Law in Ireland (Butterworths: Dublin). www.ictlaw.com