The dream that once was eircom was that a 75-year-old semi-state company could be transformed into the major national broadband provider through the combination of union/worker ownership and private capital. That dream now seems to be well and truly dead. What put the nail in the coffin in the last week or so is that eircom’s cable competitor, UPC, is now offering 12 Mbps speeds as its entry-level broadband service. This means that UPC’s cheapest broadband package is faster than eircom’s most expensive.
This is bad, but it isn’t necessarily fatal. Eircom can come out of this, but it will require some big steps.
Three things need to be done.
1. Financial innovation and transformation. The era of decadent borrowing is over. Eircom’s management and shareholders need to man up to do a deal to lighten the massive debt burden. This could mean a trip to the administrator’s or examiner’s court. It will almost certainly leave the creditors as owners of eircom. However, eircom will still need new investment, and the only way to get that is through a plan to roll out an advanced technological infrastructure in a radical, low-cost way.
2. Rejuvenating the infrastructure. Slash-and-burn. Radical is the only way forward. Anything else will leave eircom trailing its cable rival UPC in terms of service and costs. The radical solution for eircom is to transition fixed-line customers to 3G/mobile, then shut down its old, decrepit copper network, street-by-street. The copper can be removed and the holes’n’poles infrastructure can be quickly repurposed for high-speed, low-maintenance fiber-optic cables. If eircom cannot raise the cash to put in the fiber itself, it can bring in a partner, or many partners, who will rent the duct space from the old eircom.
This transformation would turn a dying infrastructure into the best national fiber optic network in the world.
3. Total rethink of the marketing proposition. This new eircom needs to present itself to the market in a radically different way from before. It needs to integrate marketing with sales and support through a single technological platform. It needs to work in conjunction with other telcos, especially the big mobile brands, but also UPC, in a spirit of true partnership, rather than solely as a competitor. There needs to be a new detente with the government and the regulator.
In one sentence, eircom needs to move from being a global laggard to a global innovator and leader. If it doesn’t, it will continue its slow decline, followed by a sudden halt. Customers are migrating to 3G or UPC broadband services so rapidly now, that the eircom landline business will soon be reduced to an unviable rump.