We pay higher bills than other Europeans - but not just because we talk more, writes John McManus, Business Editor
Every three months Vodafone and O2, the two leading mobile phone operators here, publish what are called Key Performance Indicators. These statistics are eagerly awaited by investors in the two companies, as they provide a wealth of information about the underlying trends in the fast-evolving business that is mobile communications.
One of the most closely followed figures is the Average Revenue Per User (Arpu), which is in effect the size of the average bill paid by the average customer. There are various shades of Arpu, including monthly, yearly and rolling. But they all amount to the same thing - average phone bills.
To investors they indicate how successful the companies have been at growing revenues. Arpus are, in many ways, the pulse of any mobile business.
In the Republic, they also serve to highlight the massive differential between what we spend on mobile phone services compared with our European peers. This was highlighted last Monday when O2, the second largest player in the Republic's market with 1.6 million customers, published its latest Arpus. The average yearly bill incurred by its customers in the Republic last year was €572, compared with €395 in the UK and €338 in Germany.
ON TUESDAY, VODAFONE came out with its figures. It is the biggest player in the State, with more than two million customers, who paid the company an average of €50.20 per month or €602.40 a year. This was the highest figure for the 18 countries in which the company operates, the next highest being Spain, where bills worked out at €423.60 a year. The lowest bills are incurred in Egypt, where customers hand over about €126 a year.
The pat explanation offered by the mobile operators for the huge discrepancy is that Irish people use their phones much more than other nationalities and as a result pay higher bills. It may feed into a certain national stereotype, but it is one that deserves to be treated with some scepticism, not least because of the selective nature of information released by Vodafone and O2. While they give figures for the amount of time customers spend on the phone, they hold back data on the prices paid. This makes it hard to test the other possible explanation for Ireland's higher mobile bills - higher prices than those charged elsewhere.
It is possible, however, to carry out a crude comparison based on the published data. Vodafone releases information on the voice traffic across their networks, which can be divided by customer numbers to give some sort of handle on how much people use their phones. O2 saves us the trouble by just publishing average minutes for use.
In the case of Vodafone, the monthly figure for the Republic works out at around 200 minutes a month. In Spain it is about 154 minutes and in Italy it is 137 minutes. While this seems to support the explanation that we use mobiles more than other nations, it says nothing about prices.
Again, a crude analysis is possible if the Arpu figure is divided by the minutes of use. This produces a cost per minute figure of 23.5 cent in Ireland, compared with 22 cent in Spain and 20 cent in Italy. On this basis we may well talk more, but it appears we also pay more.
A similar exercise can be performed for O2, which has significant operations only in Ireland, the UK and Germany. The crude cost per minute figure for the Republic is surprisingly similar to Vodafone's at 23 cent. However, it is the same as the UK figure and less than the German figure of 25 cent.
It is also interesting to look at the situation in Australia, a country where people's love affair with the mobile appears to equal ours. Vodafone phones were used by the average Australian customer for 210 minutes a month. But when this is divided into the monthly Arpu for Vodafone's operation in Australia it produces a cost of 15 cent. On this basis it is clear that there is more to Vodafone's big Arpus in Ireland than the extent to which we like the sound of our own voices.
The obvious difference between the Republic of Ireland and Australia is that Vodafone is the dominant player here with more than 50 per cent of the market, while in Australia it has 17 per cent, making it the number three player in a market containing four companies, thus driving it to compete aggressively on price.
While this sort of analysis is instructive, there are a number of other factors that have to be taken into account, such as the type of call as well as text and data messages. There are also big differences in Arpus between the pre-paid sector and the billed sector.
DANUTA GRAY, CHIEF executive of O2 Ireland, argues that the costs of doing business here are higher and investment per customer is higher. Similar arguments are expressed by Gerry Fahy, head of strategy for Vodafone in Ireland. Fahy also says that while the lower pricing regime in Australia reflects the intense competition Vodafone faces there, it does not follow that high Irish prices reflect lack of competition. Vodafone's pricing in the Republic is "aggressive and acceptable", he says.
The ad-hoc analysis carried out above carries a serious health warning. But it is not the only reason to challenge the spin put on Irish mobile bills by Vodafone and O2. The other reason is that the body charged with overseeing the market has already had a good look and decided that all is not well.
Last year the Commission for Communications Regulation (Comreg) came to the conclusion that Vodafone and O2 are colluding to keep prices high here.
Its analysis was based on an examination of information supplied by the companies and it was checked by both the Competition Authority and the European Commission. Comreg's conclusion that there was price-fixing is in theory a sufficient basis for it to start regulating the market. Specifically, it allows it to fix prices for mobile services and also the rates at which competitors are given access the incumbents' networks.
However, the two companies have successfully thwarted this by appealing the decision last December. The case went before the Electronic Communications Appeals Panel and was settled, with Comreg picking up the costs. However, the hearing centred on the manner in which Comreg conducted its review, and allegations of price-fixing have not been rebuffed. The authority has now started a new review of the market, but there is no certainty that it will not once again find itself tied up in legal knots by the two mobile companies.
THERE MAY BE more competition than ever before - in the form of Meteor, 3 and eventually Smart - but experience in other markets indicates that they may settle to take a small share of the current market, with its juicy customer bills, rather than engage in head-on competition with the two dominant players.
And so, for the time being the options are: stop talking, move to Australia or pay up.