Sky Ireland claims ComReg decision to change Eircom pricing will inflate costs to customers

Sky Ireland says the communications regulator's decision to change the pricing structure Eircom uses to provide competitors with access to fixed line broadband/TV infrastructure will depress customer switching and artificially inflate costs.

ComReg last month made a number of decisions, in accordance with EU directives transposed into Irish regulations, in a review of the market dealing with access to the infrastructure by companies like Sky.

Sky says one of those decisions means a €2.50 cost for switching from one TV/broadband provider to another has gone up to €170, a 7,000% increase, which it will not be economically possible for competitors of Eircom to absorb.

It also says the decisions will affect its plans for a €400m-€600m expansion of its broadband service via Eircom's current programme of rolling out high speed broadband to 300,000 premises in rural townlands.

In its proceedings against ComReg admitted to the Commercial Court today, Sky says Comreg's determinations in relation to the commercial dealings between other providers and Eircom are contrary to law and will have a significant and adverse impact on Sky's business.

Mr Justice Robert Haughton agreed to add Eircom to the proceedings as a notice party and also said an application could be made to transfer a separate application by Vodafone to be joined as a notice party to the Commercial Court case. He adjourned the making of directions in the case for a week.

The case concerns the charging structure used by Eircom which owns most of the new high speed fibre and older copper lines which go into people's homes and businesses. Eircom charges companies like Sky for the use of that infrastructure which is regulated by ComReg.

In a affidavit seeking admission to the High Court's commercial list, Kevin Barrins, Sky Ireland director of wholesale regulatory strategy, said his firm presently has more than 190,000 subscribers which are served by Eircom and BT.

In its appeal against the ComReg decisions, Sky says they contain "significant errors of fact and appraisal". They are, in several respects, contrary to fair procedure and the requirements of EU law, and the Constitution, Mr Barrins said.

Among Sky's claims are that ComReg wrongly made a decision to refuse access, on an unredacted basis, to cost models developed from the purpose of determining the prices. Eircom, which had full access to these models, was therefore given a privileged position as part of the consultation process while other retail service providers like Sky were unfairly denied the opportunity to make submissions on the same terms.

The failure by ComReg to use up-to-date accounting information in its approach to cost-oriented pricing, will lead to the "indefinite and significant over-recovery" of costs by Eircom, the burden of which will be borne by other providers and to the detriment of consumers, Mr Barrins said.

ComReg wrongly made a determination not to impose a cost-orientation obligation in particular in relation to the rural broadband roll-out, he said. Eircom effectively faces no competitive restraint and viable competition in this area will be effectively impossible, Mr Barrins said.

ComReg did an about turn in relation to the charges for migrating from one provider to another and wrongly adopted a "largely ineffectual control mechanism over charges for new connections and migrations", he said.

The cost of switching provider, using the same connection, has gone from €2.50 to €170, he said. This is likely to stymie customer switching to a significant extent given the inability of Sky and others, though not Eircom, to absorb "a massively inflated migration charge", Mr Barrins said.

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