Mr. Kevin Barrins:

I am going to speak about ComReg's remit with regard to regulation. All members of ALTO have the height of respect for everyone who works in ComReg. I worked there from 2000 to 2003. The staff of ComReg are very diligent and have to contend with extremely complex issues. I would say the level of complexity of the issues they have to deal with has grown exponentially since my time in ComReg. They are contending with a plethora of different technologies, including fibre to the curb, FTTC, FTTH, and asymmetric digital subscriber line, ADSL. To the consumer, all of these things look the same as broadband, but they have made ComReg's task much harder. As far as I understand, ComReg's resources have not increased one iota since the 2000-2003 period. At that time, we were working off between 125 and 130 staff and I think ComReg has a similar number of staff now. We have some sympathy for ComReg when it is dealing with delays, market reviews and dispute resolutions because of the resource constraints it faces. While we all accept that delays happen, the difficulty arises when delays persist for periods of three or four years. We can all live with delays of two, three or six months.

I will give an example. In 2013, ComReg conducted an interim review of its 2011 market review. This coincided with the launch of Eircom's primary broadband product, which is an FTTC product. As part of its main broadband product for the future, Eircom was selling speeds of up to 100 Mbps. At that time, ComReg determined that there was no need to impose a charge control on FTTC services given that this was a nascent technology. It believed there were sufficient constraints to protect consumers, including us, and retail customers. That worked fine in 2013 and 2014, but Eircom was bringing in more and more customers all the time. Its market power, in an economic sense, was increasing. It increased prices by 10% in 2015 and by a further 20% in May 2016. This 30% price increase in the space of 12 months caused alarm bells to ring. It was clear that the constraints which were placed on Eir, as it had become by that stage, were not sufficient. Everyone in the industry, including ComReg personnel, knew that something had to be done. We are now in June 2018 and the market review that was initiated by ComReg has not yet happened. We are still subject to those prices, which of course are passed onto consumers because it is a wholesale charge. According to ComReg's preliminary review report, as a consequence of what I have outlined there has been a transfer of wealth from other operators and customers to Eir.

It is remarkable to see that Eir has rolled out its entire FTTC network and basically overhauled and upgraded its whole network entirely from cashflow. It has not had to go back to a single shareholder for a cent of equity. It has not gone to a bank to raise a cent of debt. It has all been done through cashflow. If we took a pragmatic view, we might say "We may have been overcharged, but at least we got an FTTC network out of it". The problem relates to what will happen in the future if these prices are not reduced very soon. According to the press release released by Iliad after it acquired Eir, "In the medium term through this investment, Iliad expects to generate a dividend stream and yield a double-digit return on equity." It is clear that Iliad is hoping that the transfer of wealth will continue for some time to come. At the time of that announcement, Iliad referred publicly to a €1 billion investment plan in Ireland over the next five years. If one mentions a figure like €1 billion, it looks really good and gets one a great headline. In fact, when it is matched against what Iliad's revenue stream will look like over the same period, it involves a capital intensity rate of approximately 15%, which is pretty modest and well below what Eir has been doing over the past five years. Indeed, it is well below what Iliad has been doing in France, where it has had a capital intensity rate of 30%, or twice its figure in Ireland. I think that is quite significant.

Mr. O'Brien mentioned the FTTH connection charges. The plan seems to be the same again, as it involves €270 for a connection. I appreciate that it is expensive to connect homes in rural areas. Telecoms investments are meant to be recovered over cycles of 20, 30 or 40 years. One does not look to get such investments financed upfront by other operators. One does not allow operators to start selling one's product and then start charging those operators a good chunk on a monthly rental basis thereafter. The transfer of wealth point is of concern. These are not our complaints. In its preliminary review, ComReg said that these charges should not be charged upfront at this level. It believes the charges should be considerably lower. I guess it is a question of why we are seeing these delays. One of the concerns we have is the litigious history of Eir. ComReg might say it is not affected by that, but the reality is that the amount of work it has to do to dot the i's and cross the t's means that it needs more resources. In addition, as Mr. O'Brien has suggested, ComReg needs more powers so it can be confident that the decisions it makes will stick.