Eircom could be split into two separate firms to improve competition in the telecoms market following a new strategic review by the communications regulator.
The Commission for Communications Regulation (ComReg) said yesterday it was consulting the industry and public on the measure as a way to stop Eircom discriminating against its rivals.
It is also reviewing whether less stringent regulatory measures would enable the market to develop in a competitive manner, but concludes change is necessary for competition to work.
"To date the overwhelming feedback from alternative operators is that they do not receive equivalent treatment [from Eircom]. Given the complex nature of most wholesale products, it is impossible for the regulator to anticipate all the ways in which access-seekers can be discriminated against," concludes ComReg in a report entitled Forward-Looking Strategic Review of the Irish Telecoms Sector.
Eircom's commercial director said last night the option under review by ComReg was not very practical. Eircom had already separated its retail and wholesale arms into different divisions, he added.
Dividing Eircom into a wholesale firm that owned the network and a separate retail firm that offered services to customers should remove any incentive for it to discriminate against rivals, argue ComReg. It would also encourage competition in advanced broadband services, allow more deregulation and prevent Eircom from leveraging its market power from one sector of the telecoms arena to another, says the regulator.
But ComReg warns that splitting up the quoted company would provide neither a quick nor easy solution to the problem and notes that implementing measures of this magnitude would be difficult for a national regulator.
It warns that Eircom could cut back on investment in the short-term, cause disruption in the industry and result in reduced investment in infrastructure from alternative telecoms firms.
ComReg says that while it does not have the power to require the structural separation of Eircom into separate wholesale and retail companies, it is worth noting that the courts possess such a power under section 14 (7) of the Competition Act.
ComReg's review also outlines trends in the telecoms industry such as convergence between fixed and mobile communications and the need for further investment in infrastructure.
Isolde Goggin, ComReg chairwoman, said giving due consideration to future developments would enable ComReg to provide a degree of clarity and certainty to the market. It would also help the regulator to avoid potential pitfalls, she added.
