Vodafone and O2 to appeal plans by regulator

Vodafone and O2 will lodge appeals against the Commission for Communications Regulation's (ComReg's) efforts to open the Irish mobile phone market to more competition in a move that could block new entrants for up to one year.

The two mobile phone companies control around 90 per cent of the Irish market between them and share 97 per cent of the revenues. But they have denied ComReg's assertion that they have joint dominance.

ComReg has proposed that Vodafone and O2's networks should be open to rivals to offer greater competition to Irish consumers. Its position was supported by the European Commission yesterday.

ComReg welcomed the finding and said it would now proceed to implement remedies designed to bring more competition to the Irish mobile market.

The operators expressed disappointment and said they would appeal against the implementation of ComReg's proposals.

In a statement, Vodafone's director of strategy, Mr Gerry Fahy, called on the regulator to change its position saying that it would have no alternative otherwise but to appeal the matter.

O2 said ComReg's plan to force it and Vodafone to open their networks was bad news for Irish consumers and would undermine competition in the Irish market.

"It will likely force operators such as O2 to reconsider future investment decisions. O2 also believes the decision is likely to stall the arrival of innovative new mobile products and services to Ireland," it said in a statement.

The Labour Party's spokesman on communications, Mr Tommy Broughan, welcomed the Commission's ruling and said it would put an end to the "cosy and absolute stitch-up of the market that Vodafone and O2 have operated to date".

"For too long, Vodafone and O2 have operated a de facto cartel in Ireland that has seen them divide up monstrous profits between them every year," he said.

The latest figures available from Vodafone show that the company has 1.9 million mobile subscribers in Ireland and made just under €1 million a day in profits in the year to the end of March 2004. This represents an 18 per cent increase on the previous year. O2 is due to issue new profit figures next week.

Once ComReg formally publishes its decision, the mobile phone operators have 28 days to make a written appeal to the Minister for Communications, Mr Dempsey. He can then refer this appeal to an appeals panel, which undertakes to deal with these matters within four months.

Its decision is binding, although it could refer the appeal to a similar forum in Europe. ComReg has suggested that, if the appeal is lost, it could take up to 12 months before the networks would be opened to competitors.

It is estimated that the arrival of new mobile operators could drive down the cost of calls by up to 25 per cent.

Eircom, which has signalled its intention to return to the mobile phone market, said it would prefer to enter into commercial deals with Vodafone and O2.