Thursday, 19 October 2000
Dáil Eireann Debate
7. Proinsias De Rossa asked the Minister for Public Enterprise the proposals she has to ensure that the adoption of the European Commission draft regulation on local loop unbundling will guarantee that the practice will continue whereby all citizens irrespective of where they live in the State are given a fixed line telephone connection at a standard price; and if she will make a statement on the matter. [22662/00]
Mrs. O'Rourke: The proposed EU Regulation on unbundled access to the local loop will not affect the obligation on all EU member states to ensure that all users in their territory have access to a basic set of telecommunications services at an affordable price irrespective of geographic location.
The universal service obligation is clearly set out in Directive 98/10/EC of the European Parliament and the Council of 26 February 1998 on the application of the open network provision to  voice telephony and on universal service for telecommunications in a competitive environment. The proposed EU regulation on unbundled access to the local loop does not seek to amend this provision. Local loop unbundling will complement the existing provisions in Community law guaranteeing universal service and affordable access for all citizens in the European Union by enhancing competition, economic efficiency and bringing maximum benefit to users.
In Ireland, responsibility for providing the universal service lies with Eircom which was designated for this task in 1999 by the Director of Telecommunications Regulation. In the case where there is a proven financial burden on the relevant operator for providing the universal service, there is provision whereby the director can set up a funding mechanism to meet the cost involved.
Mr. O'Shea: I thank the Minister for that comprehensive reply. Do I take it from her reply that where somebody lives in an out of the way place and installation costs run to several thousands of pounds the cost will initially be carried by Eircom but that a fund will be put in place and compensation will be paid to Eircom? Will this fund also provide for repairs to the copper network, obviously in the context of the unbundling of the local loop?
Mrs. O'Rourke: Responsibility for the universal service lies with Eircom and where there is an undue financial burden to provide that, the fund will be there to meet the full cost involved. I do not know whether that involves strengthening the copper wire which makes the local loop, but I will find out for the Deputy. Whether it is just for the cost of provision or whether it combines with the need to strengthen the copper wire to enable the service to be strengthened or added to is a separate matter, but I will inquire about that.
Mr. O'Shea: The Minister is not giving us an assurance in terms of future connections and what she is giving us is unclear. I became aware of a case recently where I understand the installation cost was about £11,000 for Eircom. As the Minister will know, there is a system at the moment known as carrier pre-select, and the carrier pre-select card came through for a different company. A sum of £11,000 odd was spent and the only amount that would go to Eircom out of that, as things stood, is 0.6p per call. I understand there is a two monthly rental charge. We need to move away from that inequity where a totally unjustifiable burden could be carried by Eircom in terms of keeping in place—
Mrs. O'Rourke: It is quite clear that would be a misuse of the regulation. As it was nominated by the director to be the provider of universal service and where there is a proven financial burden on the relevant operator for providing the universal service, it can be recouped by Eircom. The point Deputy O'Shea made was that Eircom could have done the work, then the carrier pre-select comes in and another provider reaps the benefit of the work already done. That is clearly something the director will have to take into account. I, too, know of the case about which the Deputy spoke and it is something we will be bringing to the attention of the director.
Mr. Creed: There are a number of very interesting terms applicable to this whole issue, including carrier pre-select, universal service etc. I am concerned there will be two losers at the end of the day, namely, Eircom and, in particular, rural communities and rural subscribers or customers for telecommunications services. Does the Minister accept that Eircom, in many instances, has the worst of both worlds? It has an obligation under the universal service operation to roll out the infrastructure, so to speak, in many areas – in the case instanced by Deputy O'Shea, at a cost of £10,000 or £12,000. However, the customer then switches over to another telecom service provider such as Esat. The company cannot sustain that kind of obligation without it—
Mr. Creed: With deregulation and the pace and direction it is taking at the moment, will the Minister assure the House that Eircom's position as a universal service operator will not cripple the company financially and, equally important, will she assure us that rural subscribers, many of whom I have instanced already, or would-be subscribers or customers of Eircom or telecommunications services will have access to all the services which are taken for granted in the larger urban areas and—
Mr. Higgins: (Mayo): Will the Minister acknowledge that Eircom and the Communications Workers Union possibly have a case when they make the point that they have been asked to  unbundle completely, to throw open their entire facility, whereas the other service providers, irrespective of how big they grow, will not be asked to unbundle? Is there merit in considering the possibility that when some of the other competitors have come in for a specific period of time, three or four years, and have established a major penetration in the market, that they likewise might be asked to unbundle their services with a view to liberalising the entire scheme and system?
Mrs. O'Rourke: In response to Deputy Creed, the regulator has said that she will provide the funding to enable Eircom to provide the network to those who want it and if that causes an undue burden on the relevant operator, there is a fund to pay back or to transmit money to Eircom to enable it to cover that cost. After that, the carrier pre-select comes into play and that is at the behest of the consumer and whatever firm he or she wishes to call upon. The payment will already have been made if the provision of the infrastructure caused an undue burden. The profit which would accrue on the calls goes to that carrier and not to the carrier who puts in the infrastructure. If providing the infrastructure is a burdensome task, it will be covered by this fund.
Deputy Owen asked me what I considered “affordable”. I expect affordable to be somewhere in the middle. There is a constant push now to bring prices down. Eircom has announced a 50% reduction on costings and prices of all calls. When you compare the price of calls now with five years ago, it is amazing what the competitive arena has brought about.
Deputy Higgins asked about unbundling. We touched on that in an earlier reply. It is clear that in many areas ntl will be the major incumbent. I live in a flat and ntl drops in leaflets every day telling me what it can provide. I said in response to Deputy Ring recently that it is clear that in time it will be an incumbent as well and its services will need to be looked at in an unbundling way.
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