O2 chief says regulation is undermining phone sector

Over-regulation threatens new or potential investment in the Republic's mobile phones market, Ms Danuta Gray, the chief executive…

Over-regulation threatens new or potential investment in the Republic's mobile phones market, Ms Danuta Gray, the chief executive of O2 Ireland, warned yesterday.

Complaining of a "duplication of regulation", which is undermining the ability of O2 and its competitors to introduce new products and build infrastructure, Ms Gray called for a far-reaching review of the Irish regulatory regime.

Competition law rather than sectoral watchdogs remained the best means of overseeing the mobile phones market, said Ms Gray, who described Irish regulation as among the "toughest" in Europe.

So stifling has regulation of the sector become, O2 has increasingly found itself constrained from developing new services and concluding commercial deals, she said.

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"Investment decisions are taken not just in the context of shareholder value or commercial viability, but in terms of second-guessing what regulatory authority will take issue with, with specific aspects of the investment decision," according to Ms Gray.

"Everything from text messaging to access to our network, to commercial agreement with other fixed and mobile operators is at threat of being regulated," she said.

O2 faces regulation from an exhaustive range of organisations, including the Government, the Data Protection Commission, the Office of the Director of Consumer Affairs, the Advertising Standards Authority, the European Commission and ComReg, Ms Gray told the Leinster Society of Chartered Accountants' April lunch.

"The question needs to be asked - when will sectoral regulation move aside and make room for competition law as used to regulate the majority of industry in Ireland?"

In a highly competitive, fast- moving market such as the mobile phones business, customers rather than State watchdogs were the best regulator, she added.

Perceptions that mobile phone tariffs in the Republic were among the highest in Europe were dismissed as inaccurate by Ms Gray.

"Prices have fallen by up to 28 per cent in the last three years. If, like the major utilities, we had increased prices in line with inflation, prices would actually have increased by more than 20 per cent in the same period," Ms Gray said.

Mobile phone bills were higher in the Republic because people used their phones more than their equivalents in other parts of Europe, she said.

Irish mobile phone use - including message texting and downloading - was 70 per cent higher than in Britain and Germany, Ms Gray explained.

O2 is the second-largest operator in the Republic's mobile phone sector with a 40 per cent market share.