Regulator to force Eircom to allow users choice of line rental company

 

Consumers will be able to rent telecoms lines from phone companies other than Eircom shortly in a move by the telecoms regulator to revitalise competition in the residential market.

Ms Etain Doyle, the telecoms regulator, is expected to issue a direction within the next week forcing Eircom to offer competitors a wholesale line rental product that the firms will be able to use to encourage customers to sign up for services.

The decision will remove the need for customers who sign up for alternative providers to pay two separate telephone bills - one for calls and one for line rental - a factor blamed for a low take-up of alternative carriers. Currently consumers who sign up to a competing firm, such as Esat or Swiftcall, must pay their line rental to Eircom and make a separate payment to the competing firm for telephone calls.

Customer satisfaction surveys undertaken by competing firms show this is an unnecessary hassle for customers. It also enables Eircom to retain a link with the residential customer, which, competitors claim, the firm has used to win back thousands of customers.

Figures published by the regulator on customers who use carrier pre-select technology (CPS) - the circuit that enables residential customers to use alternative telecoms suppliers - show an alarming decline.

The number of customers using CPS fell to 145,000 in March, down from 160,000 four months earlier. And Eircom's grip on the retail markets remains tight. It retains 86 per cent market share.

Recent financial difficulties at WorldCom and Spirit Telecom, which last year withdrew from the residential market, have added to the gloom in the telecoms sector.

Eircom's grip on the market and the difficult regulatory environment for CPS were recently cited by Esat's new chief executive, Mr Bill Murphy, as major problems for the company.

The difficult issues with CPS have also added to speculation that Esat, the biggest competitor to Eircom, may exit the domestic market, a move that would devastate competition in the Republic.

"The amount of CPS customers should be about 20-25 per cent of a total market, as they are in countries in Europe," said Mr David Taylor, director of regulatory affairs at Esat. "With 1.8 million lines in the Republic, competitors should have 350,000 customers."

A move by Ms Doyle to force Eircom to offer a wholesale line rental product would also remove the issue of bad debt for alternative suppliers. Currently firms that offer customers a telecoms service using CPS technology find it more difficult to manage customers who do not pay their bills.

Because they do not own the phone line, which is retained by Eircom, they have fewer powers to cut off customers.

"There is a difference between a bill from a utility and a bill from anyone else," said Mr Taylor. "It is true to say our levels of bad debt are above Eircom's."

It is believed the telecoms regulator will move quickly to force Eircom to offer the wholesale line rental product to spur competition. But it is expected it will take at least three months to determine the right pricing for the offer.

The move in the Republic follows a similar decision in Britain taken recently by industry regulator Oftel, which will introduce a wholesale offering within four months at a fee of £28 sterling (€43) per quarter for competitors.

Shares in British Telecom fell following the decision and it is likely Eircom will face tougher competition for residential customers in the future.

The telecoms regulator issued a decision notice yesterday that should cut the cost to competing operators of obtaining leased lines from Eircom by up to 20 per cent. An Esat spokesman welcomed the decision and looked forward to it being implemented.