Eircom prices ignore falling DSL tariffs

NET RESULTS: Walk around the bustling banking city of Frankfurt and you see the advertisements everywhere: high-speed DSL (digital subscriber line) internet access at €25 per month from Deutsche Telekom.

It's a painful reminder for an Irish visitor that there is a world out there in which countries are actually trying to grow their consumer broadband market rather than dithering over whether enough people will want the service to create a market.

At €25 - a sum that would almost certainly undercut even a casual internet user's monthly phone bill for slow, metered dial-up access - who wouldn't want this service? The approach has served Deutsche Telekom well. Some 2.1 million Germans have broadband access using DSL.

Now British Telecom (BT), after hinting for weeks, has announced it will slash the cost of wholesale DSL from £25 sterling (€41) to £14.75 (€24) monthly.

Wholesale DSL is what other service providers purchase from BT to create their own consumer offering. Rival providers noted this week that the drop in wholesale prices meant consumer DSL would now drop to or below £30 a month in Britain.

Analysts in Britain believe this is the price at which a broader swath of the public will be willing to pay for DSL. Current prices, at around £40 to £50 per month, are a bit too high for many people who are not heavy Net users and do not see any great cost or speed benefit. Unsurprisingly, at existing rates only 136,000 people have DSL.

BT's drop in wholesale pricing has been viewed with some suspicion by other operators, mainly because the company waited so long to make the cuts. Like Eircom, it has long maintained that it could not offer a product at a lower cost and still make money. Now the company says it can make money, despite the drop, because it can find other efficiencies in its network.

A knock-on effect is that companies offering high-speed internet access through cable modems have been galvanised into improving their services. Several cable operators in Britain told journalists they would match prices while offering faster access than DSL.

Contrast this to the situation here, where Eircom's DSL offering has stalled due to a legal challenge to a ruling by telecoms regulator, Ms Etain Doyle.

She determined last autumn that Eircom's proposed DSL monthly pricing, at €75 for wholesale access and €99 for consumers, was too high. Eircom insists it must charge this amount due to its own costs and because it feels the market will not be particularly interested in DSL. Of course, there are cost issues for a small operator in a small market. However, one has a suspicion that there's more smoke and mirrors than substance to Eircom's complaints.

Certainly, the company cannot be eager to cannibalise its more lucrative dial-up market in order to service - or, heavens above, even create - an emerging broadband market.

Delaying tactics of this sort have served BT, Deutsche Telekom and other European dominant operators well. They have watched smaller challengers in the DSL and broadband arena wither away as the hoped-for fast-growth commercial market for broadband failed to emerge. Into that breach stepped - surprise, surprise - the dominant operators, who now control 99 per cent of the DSL market.

But if BT says it can manage wholesale DSL at £14.75, one has to wonder what gross inefficiencies in the network mean Eircom needs to charge €75 for the same service and why our consumer product should be introduced at four times the cost of Germany's DSL package.

Our local and long-distance call pricing has not been similarly impeded by the fact that the Irish market is smaller. We also seemed able to fund one of the first digital telecommunication networks in Europe in the 1980s - an era when small size seemed an argument in favour of swift and innovative action rather than an impediment.

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On a completely different subject, the Department of Justice has at last published the Data Protection (Amendment) Bill, 2002, this week. This crucial and shamefully overdue piece of legislation brings the 1995 Data Protection Directive into Irish law (just seven years later).

The Bill gives much greater protection regarding the use of an individual's information and extends its provisions to both electronic and manual data. For companies, this Bill means far greater responsibilities in managing data.

Major changes include the provision that all data controllers - holders of data on individuals - must register with the Data Protection Commissioner's Office. Gatherers of data must obtain explicit consent from an individual to use their data and individuals have the right to block access to certain kinds of data for certain kinds of uses.

How these provisions will align with Government policy on unsolicited commercial e-mail - otherwise known as "spam" - remains to be seen.

Perhaps they will become tools for creating one of the first anti-spam legislative environments in Europe. An examination of the Bill is provided on the website of the Data Protection Commissioner at www.dataprivacy.ie/3n.htm.