I am just reading the comments of Phil Nolan, Eircom’s CEO to an Oireachtas (Parliament) subcommittee. Eircom is Ireland’s incumbent telco, and charges a ludicrous amount for its basic ADSL service. According to Nolan, the lack of uptake has nothing to do with the price – it’s just that the benefits haven’t been made apparent to the public, and that’s the government’s fault, of course -.
Nolan insists that the idea of making ADSL high speed Internet access available at EUR 25 per month is impossible, and that the service couldn’t possibly be provided at that price. He doesn’t bother accounting for how it is that you can get broadband in most other European countries for this price.
Nolan must know that wholesale ADSL, as eircom implements it, is a highly profitable business. It requires no net infrastructural investment (since the installation charge covers the cost of the head-end equipment, the customer pays for his/her own modem). The amount of bandwidth being allocated per customer is miniscule (about 11 Kbps).
True enough, it is not as profitable as eircom’s voice business, where markups on international calls typically run into hundreds or even thousands of percent. (I recently paid EUR 15 for a 15 minute telephone call to the US from an eircom payphone. The cost-of-sale to eircom for that call was probably less than about 60 cents, going by what other operators are charging for the same call. The rest was gross profit. Even from a home or office phone, the markups are are 300 percent or more.)
According to an Irish Times report on Wednesday, Nolan believes that ‘consumers have embraced mobile phones although they are relatively expensive to use’ and believes that they should do similarly with ADSL. What rock was Nolan hiding under during the late 1990’s? Surely the CEO of a telephone company knows that the reason mobile phones became so popular is because of the intensive efforts of the operators to make it as cheap as possible to own a phone?
At the same time, eircom are constantly jacking up the cost of getting any sort of phone service. The monthly rental is now 22.50, more than 50 percent more than it was five years ago. There is no rational reason for this high cost, given that most of the copper was installed 10 or 20 years ago and has long since paid for itself.
(Of course, you have to be paying this excessive rental before you can even apply for DSL service, so the real cost of having DSL in your home is more like 76.50/month, or over EUR 900/year.)
At these prices, eircom is begging for a competitor to come into the marketplace and offer an alternative ‘local loop’ to customers’ homes and businesses.
It’s not much of a secret that a number of parties in Dublin are now looking at the possibility of rewiring Ireland using modern technologies to provide better voice and data services than eircom at a “reasonable” price.
It won’t be hard to come up with a price that’s more reasonable than EUR 76.50/month.