The European Commission has accused Telecom Eireann of abusing its dominant position in the telecommunications market by charging other telecoms operators too much for handling their calls. The accusation is contained in a statement of objection which the Commission has published, following a complaint from Esat Telecom.
Telecom Eireann now has two months to reply to the statement of objection. After that, the EU may make a formal decision ordering Telecom to alter its practices, if it feels that this is warranted. It could also decide to fine the State operator.
The complaint from Esat Telecom dates back to 1996, when Esat sought discounts from Telecom Eireann for the charges the State company levied for use of its network.
Esat and the other smaller telecommunications companies use the Telecom network for routing parts of the calls for their customers. Esat complained to the Commission that Telecom was charging it too much for the use of parts of its network.
The EU Commission, which is taking a strong line in encouraging competition in the telecommunications sector across Europe, first issued a so-called warning letter to Telecom in September of last year. It is understood that the Commission recently took the second step in the regulatory process, issuing a 35-page "statement of objection", outlining its views on Telecom's charges and seeking a change in its practices.
A spokesman for Telecom said last night that it would be filing a "full and very comprehensive response" to the Commission's findings, outlining what Telecom felt it was obliged to do.
The spokesman argued that the fact that full liberalisation of voice telephony was not yet in force in Ireland meant that it was not obliged to offer so-called "interconnection rates" - industry jargon for a low level of wholesale rates - to the other operators.
Telecom also argues that the position has now changed in the Irish market, with the charge structure it offers to the other telecoms companies significantly altered, following a recent ruling by the Office of the Director of Telecommunications Regulation.
However, other industry sources claim that, despite the changed structure under which Telecom Eireann now levies charges, the overall amount they charge is still too high.
The EU Commission ruling found that Telecom was in breach of Article 86 of the Treaty of Rome and was abusing its dominant position in the markets. It is open to the Commission to fine Telecom Eireann if it chooses.
The next step in the process will involve Telecom getting full access to the details of the complaints made against it and responding to the Commission. A formal hearing of the issues in Brussels may take place next year, before the Commission issues its formal decision.
The statement of objection is understood to argue that Telecom should offer the same rates to Esat and the other smaller operations as it would charge its own operating arm in its own accounts for the call routing. However, as Telecom operates as one company, it is not clear precisely what level of charges this would imply it should charge the other operators.
A range of issues have caused tension between Esat Telecom and the Telecom Eireann in recent years, as Esat has worked to make inroads into Telecom Eireann's corporate customer base.
The Irish regulator recently ordered Esat and some other smaller companies to cease using devices called routers to put their calls through the Telecom network. Instead, the regulator brought in a new "switchline" system under which Telecom charged the smaller companies wholesale rates for using its lines. The smaller operators still contend that the charges levied on them are too high.
