How ComReg allows eircom to increase our line rental whether we like it or not

If eircom wants to increase line rental charges in this country, in theory there is nothing that can be done about it. eircom have “Significant Market Power” (this is telecoms speak for the power to smother all competition) and so the way they bill people must be regulated according to the EU. The regulator does this by creating a pricing model. Via a suggested usage model, ComReg created a model for the average user and this model is then used to keep eircom’s phone charges down (in theory). For a phonebill ComReg created a model something like: W + X + Y = Z. Z cannot increase by anything more than inflation. W is the cost of say 10 mobile calls, X is the cost of say 20 local calls and Y is the line rental charge. There are more costs on the left hand side than those mentioned.

ComReg have allowed eircom to dictate the prices of the individual items on the left hand side of this model. W and X and Y etc. can be changed by eircom once Z does not increase by more than inflation.

Increased use of mobiles, use of VoIP on broadband and massive price cuts by resellers means that telcos across Europe are making way less from landline calls. eircom is no exception. It would make sense then for eircom to look at ways at preserving the revenue they get from a customer without making too much effort.

To do this they are going to bump up the cost of line rental while reducing the cost of calls. Once the increase in line rental balances with the decrease in call costs, they can do it. Since people make hardly any calls, eircom are in effect making more money per customer even though one side of the equation remains static. The model is seriously flawed. In other countries the regulator also controls the line rental charge so a telco can’t screw you with a massive line rental charge which you have no choice in paying, unlike all the other variables.

Ireland now has the highest line rental charge in the EU at €24.17 per month, €8 above the EU average and €6 more than the second most expensive EU country. Welcome to regulation, ComReg style. That’s the “how” ComReg allows it, ever wonder the “why”?

Bonus fuckover. The model apparently includes VAT. eircom is fighting to make sure that phone is classed as a service and not a product. If it is, it means a rate of VAT at 13.5% and not the current 21%. You won’t see a 7.5% saving on your bill though but I bet you will see some announcement of a 2% saving and later in the year ComReg will inform the world how they have saved you money in their tireless effort to help the consumer.

So with so much taken in line rental, what have we got? An eircom network that is riddled with crappy lines. eircom have told the Oireachtas that to remove carriers (devices that splits a phone line between a few houses, saving copper but with the result broadband doesn’t work on them) will cost €200 million. Where’s the 100s of millions they take on line rental going?

ComReg have a consultation on landline bills at the moment and are looking for feedback. More details here. The deadline for sending in feedback is Friday the 29th of September. I suggest emailing and tell them what you do and don’t want on your phone bill.

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