Dáil debates

Thursday, 10 March 2005

4:00 pm

Photo of Liz McManusLiz McManus (Wicklow, Labour)
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Question 8: To ask the Minister for Communications, Marine and Natural Resources if he is concerned at the initial level of pricing for a 3G mobile phone service in Ireland; if his Department has contacted the Commission for Communications Regulation with a direction on this matter; and if he will make a statement on the matter. [8203/05]

Photo of Noel DempseyNoel Dempsey (Meath, Fianna Fail)
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I have no function in setting pricing for phone services. The regulation of telecommunications operators, including pricing for mobile services, is the responsibility of the Commission for Communications Regulation, ComReg, in accordance with the requirements of the Communications Regulation Act 2002 and regulations made under the EU regulatory framework for electronic communications.

As Minister for Communications, Marine and Natural Resources, I have responsibility for overall telecommunications policy and my main goal in this policy is to create conditions for sustainable growth and competition that will benefit the economic and social development of Ireland by providing competitive services. It is my belief that improving the market conditions to enhance competition is the best way to drive down mobile phone charges to the end user. The more competitive telecommunications services that are on offer, the better in the long run for consumers, the sector and the economy.

In March 2004 my predecessor issued policy directions to ComReg, including a direction on competition. That direction on competition mandates ComReg to focus on competition as a key objective, with a particular focus on competition in the fixed and mobile phone markets, and to implement where necessary remedies which counteract or remove barriers to entry and support entry by new players to the market and entry into new sectors by existing players. In doing so ComReg should have particular regard to the following: the market share of new entrants; ensuring that the applicable margin attributable to a product at the wholesale level is sufficient to promote and sustain competition; price level to the end user; and the potential of alternative technology delivery platforms to support competition. ComReg has, as one of its key objectives, under the Communications Regulation Act 2002, the promotion of competition in the exercise of its functions. Competition in the fixed and mobile phone markets will drive down prices for consumers.

Photo of Tommy BroughanTommy Broughan (Dublin North East, Labour)
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Do the report by ComReg, Market Analysis — Wholesale Access and Call Origination on Public Mobile Telephony Networks, and the initial 3G prices we have seen not again show that the mobile phone market, particularly for Vodafone and O2 is a licence to print money? Members of the Oireachtas Joint Committee on Communications, Marine and Natural Resources found the report shocking. The two main operators have 94% of the market in Ireland. We are the only country where the two leading operators seem to have a co-ordinated strategy. This contrasts with the UK where the top two operators have only 50% of the market. Even in countries like Austria and Finland the third and subsequent operators have at least 25% of the market.

For two or three years representatives from Vodafone and O2 appeared before the committee and told us a pack of blarney on the matter. They claimed our mobile phone costs were very high because we love to talk, which we do. However, even on that score, based on the ComReg analysis, while Ireland does not have the highest amount of talk time, we have by far the highest average revenue per user. These two giants, particularly Vodafone, have taken advantage of us right, left and centre. Our revenue per minute is among the highest in Europe.

The most damning point in the report regarding the Vodafone companies is that while German media commentators and parliamentarians feel the margins there represent a licence to print money, margins here are far higher and the same is true for comparison with O2 in other markets. Does the Minister not agree we have been ripped off by these large powerful companies? While I admit they did well in rolling out the networks and supplying us with mobile phones, in reality we have had to pay through the nose for it. Is it not time we ensured that the decision of ComReg and of the committee was implemented? We need to get mobile virtual network operators on-line as soon as possible. In countries like Britain, Denmark and Finland, where this has happened real competition has emerged. Is it not time for the Minister to issue some policy directives on the matter?

Changing mobile providers is very difficult. For example, Vodafone has approximately nine different tariff options, including Vodafone Social Life, Vodafone Work & Leisure, Vodafone More to Say, Vodafone Light, Vodafone Extra, Vodafone Active, Vodafone Business 75 etc. I could outline the same number of options for O2. Given that virtually all of us have mobile phones, is it not time the Minister took an initiative to stop these companies taking advantage of us in this way to ensure we get real competition. This may necessitate the Minister introducing legislation to give ComReg much stronger powers given the market dominance of the big two. From this damning report, considered by the Oireachtas Joint Committee on Communications, Marine and Natural Resources under the chairmanship of Deputy O'Flynn, it is clear they are co-ordinating their policy to effectively rip us off.

Photo of Noel DempseyNoel Dempsey (Meath, Fianna Fail)
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I welcome Deputy Broughan's contribution, which supports Government policy in this area. The thrust of my response to the legitimate question he raised is that the best way of ensuring 3G and other services are provided at a lower price is to ensure there is competition in the market. That function is very much part of the directions I have given to ComReg, which has been mandated to focus on competition as a key objective with a particular emphasis on competition in the fixed and mobile markets. ComReg has the power to introduce remedies where it finds there are barriers to entry into the market or where competition is being suppressed.

Like the Deputy, I welcome ComReg's recent report. The remedies proposed by the commission in regard to the dominant position of the two mobile telephone companies and the alleged collusion between them will allow mobile virtual network operators access to the networks and ensure access to the market for as many operators as possible. As Deputy Broughan observed, this approach has been successful in other countries. In Denmark, for example, charges dropped by some 25%.

Although I have no function in this regard, I have had direct discussions with the two leading operators and have made the point to them that the Irish market is overpriced. They, in turn, have made their case to me and supplied me with further details from their point of view. However, I strongly support the view and actions of ComReg in this matter. Competition is necessary and Irish consumers, who are significant users of mobile telephony, contribute greatly to the profits of these companies and deserve better than what they are currently receiving.

Photo of John PerryJohn Perry (Sligo-Leitrim, Fine Gael)
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ComReg has been very effective and is clearly increasingly empowered in performing its functions. What help can the Minister give the commission to ensure there will be competition in view of two players controlling 94% of the market? What timescale does the Minister envisage for measures such as sharing of masts and deregulation of facilities to allow competition and reduce prices? Is any legislation required to speed up this process?

Photo of Noel DempseyNoel Dempsey (Meath, Fianna Fail)
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I have had meetings with ComReg on a number of occasions since joining my Department and am not aware that any outstanding legislation is required. However, if ComReg needs further assistance through legislation or any other means, particularly to address the area of competition, I will have no difficulty in that regard.

Photo of John PerryJohn Perry (Sligo-Leitrim, Fine Gael)
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That is very good and I thank the Minister.

Photo of Joan BurtonJoan Burton (Dublin West, Labour)
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Question 9: To ask the Minister for Communications, Marine and Natural Resources if he will make a statement on the recent report, Market Analysis — Wholesale Access and Call Origination on Public Mobile Telephony Networks, produced by ComReg and the subsequent statement issued by the Joint Committee on Communications, Marine and Natural Resources on its review of the mobile telephone market urging mobile telephone companies with a dominant market position to enter into MVNO arrangements on commercial terms in Ireland; and if he will make a statement on the matter. [8195/05]

Photo of Noel DempseyNoel Dempsey (Meath, Fianna Fail)
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ComReg is independent in the exercise of its functions and it would be inappropriate for me to comment in detail on its work. However, I have noted its recent findings in the report, Market Analysis — Wholesale Access and Call Origination on Public Mobile Telephony Networks, in which it designated the mobile telephone companies, O2 and Vodafone, as having significant market power and concluded the market was not effectively competitive because of their joint dominance. I note also that the European Commission supported this finding, which was notified in accordance with Regulation 20 of the framework regulations, SI 307 of 2003, and Article 7 of Directive 2002/21/EC of the European Parliament and the Council on a common regulatory framework for electronic networks and services.

A new regulatory framework was introduced in 2003 which was designed to ensure competition between providers, some of which dominate for historical infrastructural reasons thereby giving them market advantage. As Minister with responsibility for telecommunications policy, I welcome any developments that improve competition in the sector. The more competitive telecommunications services that are on offer the better in the long run for consumers, the sector and the economy.

ComReg has, as one of its key objectives under the Communications Regulation Act 2002, the promotion of competition in the exercise of its functions. Competition in the fixed and mobile markets will drive down prices for consumers. Under the new European framework, ComReg's basis for intervening in a market is now predicated on finding an operator dominant in a given market. I also welcome the interest shown by the Joint Committee on Communications, Marine and Natural Resources in this regard and compliment it on its comprehensive review of the mobile telephone market and its associated report.