Eircom's wholesale ADSL broadband internet service could cost subscribers as much as £175 (222) per month when it is introduced next month.
According to confidential documents seen by The Irish Times, all of Dublin's 35 telephone exchanges are ready to offer ADSL (asynchronous digital subscriber line), a high-speed internet service transmitted over the existing copper phone wires running to homes and businesses.
The service is understood to be far more expensive than similar offerings in Britain. Because of the costs, only Esat/BT is understood to be a potential buyer of the wholesale service. Esat would then offer ADSL through its internet service provider, Ireland OnLine, providing competition with ADSL services offered by Eircom-owned ISPs Eircom Net and Indigo. The service will be capable of receiving data at 1 megabit per second, and sending data at 256 kilobits per second. However, up to 24 users can share the line's capacity at the same time - a contention ratio of 24/1. This means actual data delivery is likely to be much lower in practice, depending on how many people are online at a time.
Contention ratios are considered to be a more relevant measure of the true quality of ADSL service than overall delivery speeds.
Eircom is also providing bitstream access rather than full access to its lines. This means Eircom still controls the exchanges rather than giving other operators access. In the past, other operators had argued strongly for total "unbundling of the local loop", or access to the copper lines, rather than bitstream unbundling.
Eircom also indicates in the document that it will offer only one product. Therefore, competitors must purchase the entire product and would need to offer full ADSL packages to customers, or break down the product into other niche offerings themselves. This is expected to decrease the likelihood of a lower-priced consumer ADSL offering, at least initially. Small businesses are expected to be the primary customers for ADSL after its launch.
While prices are not specified in the document, it is understood that the wholesale price is likely to be much higher than in Britain or the US, and would be closer to the actual cost of providing an ADSL connection. An informed source says a single ADSL connection costs Eircom £2,500 per line to provide. BT's consumer offering in Britain, at about £40 sterling per month, is heavily subsidised.
One source said Eircom would be looking for a price that would enable it to recoup much of the cost of providing ADSL. The source said this approach was part of a wider industry move to stop underwriting the cost of ADSL forconsumers in the current troubled telecommunications market. BT has already announced it will increase prices.
"No one cares about market share any more, they care about profit," the source said. While prices remain low for ADSL in the US - about $40 (44) per month - there are indications they will begin to rise. Almost all independent competition has gone out of the US market.
The document says Eircom will review prices on an annual basis. It will also gradually supply ADSL to all Dublin exchanges and then to other regions in the Republic.
Under the wholesale contract for ADSL, other providers of ADSL services must ensure that provision of ADSL does not disrupt Eircom's services on the same lines.
