Eircom customers face line rental rise

Eircom customers are facing increases in line rental from next month, as part of an overall adjustment of its charges that will also see some costs fall, writes Barry O'Halloran.

Overall the move could add up to 1.5 per cent to the average phone bill.

The fixed-line operator yesterday announced that it would increase its line rental charges by €1.45, from €21.15 a month to €22.50 a month (including VAT)from June 2nd. At the same time, the company said it would cut the cost of calls from its fixed lines to 087 mobile numbers from 21 cents a minute to 19 cents. A spokesman told The Irish Times that the changes would add about 1.5 per cent to the average phone bill.

This will be its second increase this year. Last February, the company added €1.54 per month (including VAT) to its line rental charges.

Eircom, which has around 80 per cent of the fixed-line market, said it was increasing rental charges because the actual cost of providing the lines exceeds the rental income the company earns from them.

According to its spokesman, it costs €24 a month ex-VAT to operate each individual line, while the ex-VAT earnings come to €19.

He pointed out that this meant the company was effectively subsidising its competitors to the tune of €145 million a year, as their subscribers pay the same line rental as Eircom customers. "That is obviously not sustainable," the spokesman said.

From June, the company will have to rent its lines at wholesale rates to its competitors, the largest of which is BT-owned Esat.

The communications regulator, Comreg, recently ruled that the wholesale rate should be the retail cost less 8.5 per cent. On that basis, the ex-VAT wholesale cost will be €15.80.

Currently, Eircom continues to charge rent to all fixed-line customers in the State. Its competitors charge only for the calls their customers make.

This means that consumers and businesses who subscribe to any independent telecoms provider get two bills, one for calls from the service provider, and one for rent from Eircom.

Next month's change means they will get just one bill from their service provider, a development that independent operators had been seeking for some time.

While they have welcomed Eircom's introduction of wholesale line rental, their industry body yesterday criticised Eircom's decision.

Mr Iarlaith Flynn, chairman of the alternative telecoms operators group, Alto, accused Eircom of trying to "sweat as much income as possible from a monopoly asset".

"When competition was introduced in 1998, rental was €184 a year. This next increase will bring it up to €270 per annum," he said.

Eircom's spokesman rejected Alto's claims. "The facts of the matter are that our inter-connection rates (the cost of providing lines to its competitors) are the second lowest in Europe," he said.