Esat and Eircom in pricing dispute

Esat yesterday accused Eircom of trying to create a monopoly for itself in the digital-line subscriber market while Eircom accused Esat of "hypocrisy" and trying to "piggyback" on Eircom's investment.

Both sides agreed yesterday they were free of a non-disclosure agreement on price structures and immediately began to differ strongly about the fairness of the price structure offered by Eircom.

The market for the technology, which would allow connection to the internet at speeds of up to 30 times the current rate, could create a market worth up to £100 million (€127 million) a year by 2003, according to Esat. The service is considered important for overall economic competitiveness.

On Wednesday telecoms regulator Ms Etain Doyle told Eircom it would have to submit revised wholesale pricing proposals if its proposed service, i-stream, was to receive a licence. The service cannot be introduced until 21 days after receiving licence approval. Its launch is being held up because of the pricing controversy.

Esat chief executive Mr Richard Cooke said it was being offered a wholesale connection charge of €700 (£551) and a monthly wholesale charge of €75, and that both were too high.

Esat said the norm in countries where the service already existed was that the wholesale monthly charge should be 60 per cent of the retail charge being levied by the wholesale operator.

As Eircom is offering the service to retail customers at €99 a month, this means Esat should be charged just under €60. It said that at the prices currently being proposed, no competitor would enter the market.

Mr Cooke said Ms Doyle was not holding back the roll-out.

"She is trying to ensure there is competition. Eircom is trying to retain a monopoly in the market, but at this stage it looks like its gamble is not going to work."

Mr Cooke said the row was "a real case of corporate arrogance" by Eircom. He questioned whether Eircom was involved in cross-subsidisation between its retail arm and its network.

However, a spokesman for Eircom said its retail arm was charged a €700 connection fee, the same as Esat. The fee was a way of trying to recoup the costs incurred when putting infrastructure in place.

"They are trying to piggy back on our network," he said. "Eircom is not going to be subsidising other operators."

On the monthly fee the spokesman said it was "extraordinary" that "BT Esat" was saying the wholesale price should be 60 per cent of Eircom's retail price when in the UK, BT had charged a wholesale price when it initiated its service, which was higher than the retail price being offered.

He said this wholesale price had since been lowered but he was sure the differential between the prices was still less than Eircom was offering.

"It is hypocritical and disingenuous in the extreme" for a "major global player which is trying to piggyback on the Eircom network", to suggest Eircom was doing something wrong.