Verdict due on Dublin’s call for time

Date: 24/10/1996

By Chris Johnstone

THE European Commission is set to decide within the next two weeks on Ireland's demand for more time to fall into line with the 1998 deadline for voice-telephony liberalisation.

Treatment of the Irish case will set the tone for the Commission's examination of a handful of other derogation demands from member states and determine whether telecoms liberalisation gets off to a unified or a multi-speed start after 1998.

Top Commission officials have already warned that Ireland will have to trim substantially its series of demands for extra time if it is to win clearance.

Irish government officials also concede they will have to give some ground, but are confident of winning enough time for state-owned Telecom Eireann (TE) to adapt to a more cut-throat competitive environment.

“We are optimistic, but at the same time we do not expect the Commission to roll over and give in,” said a spokesman for Ireland's ministry for telecommunications, tourism and transport.

Ireland has asked for a series of exemptions after 1998. It is fighting for an extra two years for voice-telephony, infrastructure liberalisation and mobile phone network interconnection, and wants until July 1999 to open up alternative infrastructure for liberalised services. These demands have been attacked by 14 of the 15 rival businesses which responded to the Commission's invitation for comments.

British Telecom (BT), one of the companies concerned, strongly disputes TE's claim that it needs more time to modernise its basic network. Critics say that TE already has a relatively modern network and most of the capital spending earmarked for the future is aimed at a fibre optic network which would give it an advantage over many other European countries.

Commission officials have highlighted the fact that TE owns a major stake in Ireland's main cable company, Cable Link, as a serious obstacle to delivering the derogations demanded. One top official said recently that it was questionable whether the main concession delaying liberalisation of voice-telephony and public infrastructure until the year 2000 could be allowed while TE retained its majority shareholding.

The Irish government is playing down any suggestion that TE might have to sell off or diminish its stake in Cable Link. “We do not think this is a serious problem,” said a spokesman.

Far from reducing its involvement, Dublin plans to make Cable Link the vehicle for pushing the country into the multi-media future. Irish sources claim that until now, the Commission has made no attempt to force other telecom monopolies out of cable operations.

Encouraging cable companies to challenge established phone monopolies where they are strongest - by offering basic local phone services - is one of the fundamental goals of the Commission's grand strategy for telecoms competition.

Luxembourg, which argues that it has a small vulnerable network heavily dependent on international calls, has asked for an extra two years - the maximum available to the Grand Duchy under the liberalisation plan - to bring in the changes by the year 2000.

Ireland, like Spain, Portugal, and Greece, was given the option of an extra five years after January 1998 to open up its markets.

Greece has asked for the full five years before the end of the voice-telephone and infrastructure monopoly held by the state-owned company OTE.

Spain's right to a five-year derogation is being used as a bargaining chip with Commission competition watchdogs who are now vetting its plans to take part in the international telecoms alliance Unisource.

Greece has come up with similar arguments to Ireland's.

Athens reasons that it is carrying out an expensive programme of modernisation, including creating digital networks, and faces extra costs because of its difficult geographical terrain.

It maintains that voice-telephony is still the cash cow for its business, which would suffer severely if its monopoly was dismantled.

Portugal, fearful of a haemorrhaging of its business customers if rivals are allowed to offer tailor-made services, has demanded until July 1999 before opening up alternative networks. It warns that it would lose 124 million ecu over five years from the fresh competition and that such a loss could endanger its universal service obligations.