Mr. Kevin O'Brien:

I will revert to the primary protection that is there for all consumers in the country regardless of where they live, which is the universal service obligation. It guarantees that the retail price is the same for absolutely everyone in the country. It also guarantees access and if the cost of building to a house located in a particularly difficult location is anything up to €7,000 of additional cost for Eircom or whoever is the universal service operator, that company must meet the cost. There are quite strong rules in place that guarantee one will get a fixed line no matter where one lives and guarantee that its price, which is around €25, is the same for everyone. In that regard, the cost to Eircom of providing a copper line in an urban area could be quite low, let us say it is €5, while in an extremely rural area, the cost could be €50 or €60 or more. Consequently, by having a single national price, the urban population in some cases probably is subsidising the rural cost. This is something that occurs across all types of utilities and there is a similar approach in respect of energy networks. This standard national cost is a guarantee to everyone and as I noted, there is no plan to change this. It is something valued at a European level as well as at a national level.

If I come to the price change, which I think has led to this debate, members should imagine a scenario in which Eircom has not yet started to build its next-generation network, which it actually is building as we speak. Perhaps I should explain what it is building. At present, in the main, one has copper wire from an Eircom exchange to a house. That copper wire usually extends to a cabinet somewhere on the edge of a housing estate or a road and then from that cabinet, it continues to individual houses. At present, Eircom is laying fibre from its exchange to the aforementioned cabinet. In a sense, it is going halfway to all the houses with fibre-optic cable, which is a much better and faster way of providing broadband. It is doing this by starting with urban areas but with an announced target of reaching 1.2 million houses. As it does this, it needs to sell this new product, will have higher speeds and will compete a lot with UPC, for instance, which already offers high speeds in a lot of the country. In order to compete, Eircom must be able to reduce its retail prices for this product against what they may have been. If Eircom reduces a retail price, to maintain that space in which other providers that buy its wholesale product can compete against it, it must also reduce wholesale prices. We regulate it in order to keep those two things going together, that is, to keep open that economic space for someone else to be able to make a buck. What is happening is that Eircom has chosen basically to drop both of those levels in order that its new investment can be sold in a competitive way as it rolls out across the country. Inevitably, Eircom is building that new infrastructure in urban areas first and therefore, this service will arrive in urban areas first. A major challenge for us all is to try to make sure it goes as far as it can. That is the pricing change that has happened in this case. It really is about what Eircom charges others and the indications that has for Eircom's retail prices itself.