ANALYSIS: More competitors are set to enter the mobile phone market over the next 12 to 18 months in what could be a radical shake-up of the sector. It follows yesterday's intervention by the Commission for Communications Regulation (ComReg).
The ordering of access to Vodafone and O2's networks for a range of virtual operators such as Tesco and Eircom holds the potential to cut prices and introduce a range of new services.
But consumers shouldn't get too excited about the prospect of an immediate price war, as a succession of lengthy reviews and legal challenges could take up to a year, delaying new entrants.
Strident comments from Vodafone and O2 describing the decision as "factually flawed" highlight that a trip to the Four Courts is the most likely option if ComReg can persuade Europe to back its landmark decision.
But bearing in mind that Irish people spend more than any other Europeans on mobile phone services - about €44.28 per month - the prize of a competitive market is worth waiting for.
ComReg's decision notice, which runs to 221 pages, seeks to demolish the mobile phone firms' contention that Irish people spend more on mobile services because they talk more. It notes a Merrill Lynch report that French people use their phones more than Irish people (see opposite) but pay less for the privilege. It also highlights a lack of competition in the contract market, where Irish subscribers pay prices above the EU average.
ComReg's decision notice, which was described as "ballsy" by one telecoms executive, also doesn't mince its words in its analysis of the reason for high prices.
It blames a lack of competition in the mobile market and says that the evidence supports the view that O2 and Vodafone are "tacitly colluding" in the market.
It also highlights that O2 and Vodafone maintain a 94 per cent share of the market despite the entry of Meteor to the market in 2001. The proposed entry of a new mobile operator ("3") would not cause the necessary disruption to the market to cut prices for consumers, says ComReg.
Rather than impose price caps on the mobile operators - a path taken in the British market - ComReg has decided to try to introduce competition by bringing in virtual operators. These firms would lease airtime from the network operators at prices set below the standard retail tariffs to sell on to consumers.
Up to now very few network access deals have been agreed between mobile operators, which have a vested interest in keeping control of their networks. This has led firms seeking to become virtual operators to complain to the regulator that they are not offered viable commercial terms.
Under ComReg's ruling, it will be able to intervene and force O2 and Vodafone to provide access at regulated prices, in a similar manner to how it forces Eircom to offer access to its network.
ComReg plans to use competition law to back its ruling, which could set a precedent for mobile phone operators across Europe.
There is no doubt it will face a tough battle against firms such as Vodafone which have a global footprint and limitless resources.
It will also have to shrug off the effects of the Eircell-Meridian case, which dealt with the latter's claim to be entitled to be a virtual operator using Eircell's network. The High Court ruled in Eircell's favour in this case, arguing that Eircell did not possess a position of single dominance in the Irish market place.
