The costs of telecommunications services fell more here than in any other European Union state in the 12 months to October 2001, a new survey has found. The price of communications in the Republic fell by 8.9 per cent during this period while prices rose in three EU states, according to a report by Eurostat.
The survey found the average price reduction within all 15 member-states was about 2 per cent. Prices rose in Austria, Finland and Sweden.
Since liberalisation in 1998, consumers have benefited from cumulative price declines of 18 per cent as competitors entered the Irish telecoms market. Last year's price cuts were stimulated by announcements in late 2000 from cable firms NTL and Chorus that they would offer telecoms services over their own networks.
Eircom responded aggressively to these firms and a plethora of other smaller operators entering the market by reducing its own prices beyond the limit in a price cap enforced by the telecom regulator, Ms Etain Doyle.
But the good times for the Irish consumer may be coming to an end as the trend towards price cutting slows during 2002, according to telecoms experts.
"It seems that Eircom's fixed-line market share is stabilising and the competitive pressures on the market are easing," said Mr Conor Walsh, analyst with Goodbody Stockbrokers.
"There has been a major crunch in capital markets for telecoms firms and this trend has begun to hit home and the trend looks like continuing into next year."
These views are supported by a major telecoms review published recently by Ms Doyle which showed competing operators had lost 1 per cent market share to Eircom during the third quarter of 2001.
Continuing cashflow difficulties at the two domestic cable companies NTL and Chorus have slowed the rollout of upgraded networks capable of carrying Internet and telecoms traffic.
The two cable operators claim about 21,000 telephone customers, somewhat below previous expectations. And during 2000 several smaller telecoms firms dropped out of the market, the most high profile, Spirit Telecom, which at one time claimed up to 80,000 domestic customers.
These developments have significantly reduced the competitive pressures on the incumbent Eircom and will probably enable it to slow the trend towards price reductions. Although Eircom will still have to reduce prices for a basket of services under the terms of the price cap - regulated at the consumer price index minus 8 per cent. This year the regulator will review the basket of services which will be regulated by the price cap and could remove some of those contained within it.
Eircom has already said publicly it will seek the removal of some services from the price cap but with competitive pressures easing it will have a tough fight trying to convince Ms Doyle.
All eyes will be on Eircom as its new private owners seek to build the company's strategy in the Republic following its calamitous period of public ownership. The company will have to run its affairs while carrying significant debt on its balance sheet. This could result in job cuts and a sharp reduction in capital expenditure on new infrastructure. Observers will be keen to spot any change in the firms stance on several thorny regulatory issues.
In her last quarterly review Ms Doyle set a goal of tackling issues such as unbundling the local loop - opening Eircom's local network to competition - and the provision of broadband services for 2002.
Relations between the incumbent operator Eircom and the regulator are likely to remain tense over a range of regulatory issues, many of which are still caught up in legal actions.
A number of regulatory bottlenecks continue, undermining competition in the sector and ultimately reducing the State's overall capacity to attract inward investment. The European Commission had set a goal of opening incumbent operators' (including Eircom) local telecoms networks to competition by January 1st 2001 but this has still not been achieved in many member states. No operator has yet been able to supply services to customers in the Republic using Eircom's local network.
A court case over the cost of accessing Eircom's local network will continue in the High Court. Eircom is challenging interim prices set by the regulator. When this is completed it should provide a more stable base for operators to justify capital investments in broadband infrastructure.
Likewise, a dispute over the provision of Eircom's new high speed internet product i-stream, the state's first proposed installation of digital subscriber line technology, should be concluded.
The regulator has prevented Eircom from offering the product because she feels the company has not made it available to its competitors at a reasonable price. The dispute has dragged on for months and is undermining Irish business competitiveness because firms don't have access to cheap internet products. However, at least one major bottleneck - the delivery of leased lines to competitors - within the telecommunications sector has been addressed by Eircom. During the past two years operators and firms attempting to change their telecoms suppliers faced significant delays in the provision of circuits from Eircom.
But the latest data show Eircom has improved its average delivery times in October 2001 to between 36 and 43 days, compared with 70-90 days in November 2000.
