Esat seen as having breached terms of its licence

Esat Telecom was operating outside the law in relation to aspects of the "non-voice" landline business in which it was competing with Telecom Éireann in 1995, the former head of the telecommunications division in the Department of Transport, Energy and Communications told the tribunal.

The winning of the second mobile phone licence competition by a consortium in which Esat Telecom was a member raised questions as to the credibility of the telecommunications regulation process, according to a note Mr Sean Fitzgerald wrote in October 1995, just prior to the announcement that Esat Digifone had won the competition.

In the note, he mentioned the possibility that the granting of a licence to Esat Digifone might be reviewed if Esat Telecom did not provide a satisfactory response to the Department's concerns in relation to regulatory matters.

Mr Fitzgerald told Ms Jacqueline O'Brien, for the tribunal, that he wrote an aide-memoire to himself. The memo recorded his view that Esat Telecom had gone outside the terms of its licence into an area of business reserved for Telecom Éireann. The memo said the potential damage to Telecom Éireann was significant, "and what is worse is that the law is not being upheld".

The memo raised the question as to whether it was credible that Esat Digifone would comply with regulatory restrictions without strong regulatory enforcement. It also noted that the result of the competition process would have to be respected.

The memo also recorded the perception that Esat Telecom was "presumed to be immune to any regulatory activity" and to have the appearance of ministerial and government backing.

Mr Fitzgerald recorded concerns about the reaction in Telecom Éireann to Esat Digifone winning the mobile phone licence competition. He noted that Telecom Éireann management had "so far" been restrained from taking legal action against Esat Telecom and that industrial action by disgruntled unions was also a possibility.

He felt the winning of the licence by Esat Digifone, coupled with an unwillingness to enforce the regulations on Esat Telecom, could undermine the regulatory process.

Mr Fitzgerald told Ms O'Brien that the regulations at the time were unenforceable as there was a very "esoteric" division between what was allowed and what was not. It was noticed by Telecom Éireann that when Esat Telecom won a customer for certain allowed types of communications, such as fax and data transmission, that customer's long-distance telephone calls "simply disappeared".

Mr Fitzgerald said he knew nothing at the time of a meeting during the competition period between Mr Denis O'Brien and Mr Michael Lowry or of a meeting during the same period between Mr Lowry and Mr Tony Boyle of the Persona consortium.

He also said he knew nothing about a conversation in September 1995 at Galmoy mine between Mr Lowry and Sir Anthony O'Reilly where Mr Lowry, according to Sir Anthony, expressed a view as to how a consortium with which Sir Anthony was connected had performed during an oral presentation linked to the licence bid.

He said Mr Lowry could have been "chancing his arm" and that some ministers sometimes tried to pretend they knew more about matters than they actually did.