Mobile operators' profits excessive, says ComReg

IRISH mobile phone operators are earning excessive profits from their customers, who pay the most expensive charges in Europe, according to a damming new report from the telecoms watchdog.

The Commission for Communications Regulation (ComReg) said Vodafone and O2 Ireland had a "dominant" position in the Irish market and were not competing with each other for customers.

"Lack of effective price competition at the retail level, sustained over a period of years in the face of a highly concentrated market, suggests that the Irish mobile retail sector might be particularly susceptible to a position of joint dominance being exhibited by Vodafone and O2," the report said.

ComReg chairwoman Isolde Goggin said she found no evidence of price-fixing in the market, but said there was no incentive for either Vodafone or O2 to compete in price in the lucrative bill-pay market.

Yesterday's report met with furious reaction from the industry. O2, which has 1.4 million customers, said it would be challenging the findings, including the assertion that it was a dominant player.

A spokesperson for the company said the Irish market was one of the most competitive in Europe and that customers have seen prices fall over the past four years.

"This is a very bad day for Irish consumers. Last year we cut prices for pre-paid customers by 14% and by 5% for post-paid."

The ComReg report said that the average revenue per user (ARPU) has risen steadily at the two key players in recent years.

At Vodafone, ARPU for the 12 months to the end of June 2002 was €523 and had risen to €591 at the end of June last year.

At O2 Ireland, ARPU had increased from €545 to €556 over the same 12-month period.

"This suggests to Comreg that price changes by O2 and Vodafone occurring over the period 2001-2004 have not been aimed at acquiring significant customers from rivals in the market," the report said.

The O2 spokesperson denied that customers were paying more in Ireland, saying that compared to other companies in the market, O2 monthly bills here were higher because of extensive use.

However, figures released by ComReg found that prices in other countries are much lower, even though consumers spend longer on their phones.

It found that in France, the average customer spends 213 minutes a month on their phone at a cost of €32.80.

Irish customers use their phones for an average of 198 minutes a month, running up a bill of €44.28.

Both Vodafone and 02, which control 94% of the market between them, have repeatedly denied Irish customers are being ripped off.

ComReg is proposing that mobile virtual network operators (MVNOs), which piggyback on the other networks, be given access to the Irish market.

It said that when this happened in Denmark, a country of similar size to Ireland, 12 new companies launched services and prices fell by 25%.

The third mobile operator, Meteor, has seen a surge in customers since it signed a national roaming agreement with O2, giving it full network coverage across the country.

Meteor's customer base is mainly pre-paid, which has resulted in falling prices. "We can compete in the post-paid market, we will compete in post-paid and we would have brought in an MVNO if we got a commercial. I don't see anything in this paper that shows me that there will be more competition in the post-paid market," Meteor head of corporate affairs Andrew Kelly said.

Ms Goggin said yesterday that MVNOs have led to significant reductions in call prices for consumers and pointed to Virgin Mobile in Britain as an example.

Eircom commercial director David McRedmond said last night that the company was looking to get back into the mobile phone market and was studying the document.

ALTO, which represents independent telecoms operators, said mobile customers had been paying high prices for years and if the ComReg proposals were implemented, it should lead to a fall in monthly bills.