Eircom
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Template:Lowercase Template:Infobox Company eircom Group plc is the largest telecommunications operator in the Republic of Ireland.
As Bord Telecom Éireann plc, the company was (until 1999) a state monopoly; as a private company it continues to dominate many telecommunications areas, its main competitor's being Smart Telecom which operates its own network, and BT Ireland (formerly Esat BT), accessed via eircom's network. eircom currently operates the fixed-line telephone network, act as an internet service provider (ISP) eircom.net, and operate a property alarm installation and monitoring unit called eircom Phonewatch. An analogue TACS and a digital GSM 900 network operation in Ireland, started as Eircell, was once owned by eircom. It is now run by Vodafone. eircom now has a 44% share of the Irish telecoms market.
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Services
eircom operate the largest fixed-line telecommunications network in the Republic of Ireland, under licence from the Commission for Communications Regulation. Most homes and businesses in the state are connected by this network. A full range of telecommunications services is provided on the network including Business IP, it's MPLS platform. Their ISP division, eircom net, provides dial-up services, as well as broadband (see broadband roll-out, below) services. eircom Phonewatch provides burglar alarm and home monitoring services.
As an operator with significant market power, eircom is required to provide a number of wholesale products to other operators and to switch calls onto other phone networks. Many broadband products offered by other operators are resales of the eircom product.
eircom has been subject to much criticism in the performance of its activities. See the criticism section below for more details.
History
The company was formed in 1984 as Bord Telecom Éireann, under the Posts and Telecommunications Act 1983. This article deals mainly with the post-privatisation eircom. For details of the company during its time as a state-sponsored body, see the Telecom Éireann article.
Privatisation
Due to EU laws requiring the opening up of the Irish telecommunications market, eircom was privatised, a process which began in 1995, and by July 1999 the government had disposed of virtually all of its shareholding [1]. eircom plc was then floated on the Irish Stock Exchange, London Stock Exchange, and New York Stock Exchange s on July 8 1999 and small/first-time investors were encouraged by the Irish Government to buy shares.
The eircom flotation is considered to have been an example of a stock market bubble - after the initial hype of the flotation died down, the stock price fell rapidly. Many of the 500,000 small investors were angered by the significant financial loss they incurred, blaming the government for not sufficiently warning them of the risks inherent in stock market investment. This may have been a factor in Mary O'Rourke, the then Minister for Public Enterprise losing her seat in the general election.
Disposal of Eircell, going private and refloatation
In 2001, eircom disposed of its mobile arm Eircell to Vodafone. The company was transferred to a separate entity, Eircell 2000 plc which was then sold to Vodafone via a share swop. This left the eircom shareholder with not only shares in eircom, but Vodafone also.
After the demerger of Eircell, eircom itself was believed to be undervalued and became the subject of a bidding war between two consortia - the E-Island consortium headed by Denis O'Brien, and the Valentia Consortium headed by Sir Anthony O'Reilly, the chairman of Independent News and Media. Eventually in June 2001 the company agreed a recommended offer of €1.27 per eircom share. eircom plc was delisted from the stock exchange, become eircom Limited, a private limited company by shares and a subsidiary of Valentia.
However eircom did not remain a private company. On 19 March 2004 the company returned to the stock market (although the company being listed, eircom Group plc, was in fact a new holding company, and was registered in England and Wales rather than the Republic of Ireland). The company floated at €1.55 a share, but dipped on initial trading before recovering to trade above its float price.
Meteor
In early 2005, several Irish newspapers reported that Meteor Mobile Communications, the third mobile phone operator, was up for sale by its owners, Western Wireless. It was considered that this afforded eircom an opportunity to re-enter the mobile communications market. On 9 July 2005 it was reported by The Irish Times that there had been three bidders for Meteor: eircom, Smart Telecom, and a consortium led by Denis O'Brien. On 14 July 2005, RTÉ News reported on their business website that Denis O'Brien had withdrawn from bidding, and that it was understood that eircom was the top bidder at €410m. On 21 July it was announced that Smart Telecom had also withdrawn, leaving eircom as the sole bidder. eircom announced the agreement to purchase it on 25 July 2005 at a cost of €420m. [2].
Swisscom approach
On 2 November 2005 it was reported that the Swiss telecommunications company, Swisscom AG, had made an approach to eircom regarding a possible takeover of the company. On 9 November it was confirmed by Swisscom that the two companies were in talks that might lead to an agreed takeover offer for eircom. However on 25 November the Swiss government announced that it would use its controlling stake in Swisscom to block any foreign takeovers (it had also been rumoured that the company would bid for the Danish telephone company TDC), effectively ending hopes of a bid.
Competition
While eircom retains a virtual monopoly, at around 80%, on fixed line telephony in the State (the only exception being those operated by cable company NTL - Chorus previously offered wireless telephony but failed to renew their licence) it is required to allow carrier pre-selection (CPS). Introduced in Ireland in 2001, CPS allows subscribers to use an alternative provider for all their calls, without the need to dial indirect access codes or numbers, although they still receive a bill from eircom for line rental. Under a wholesale line rental scheme, it is now possible for customers, to have a single bill from an alternative provider, for example, BT Ireland, including the cost of Eircom line rental, rather than continuing to receive a separate one from eircom for this cost. However, unlike the UK, where BT's competitors can now charge less than BT for line rental, it is not yet possible for operators in Ireland to buy the lines from eircom and charge their own rate for line rental, should they wish.
Criticisms of eircom
Ireland continues to lag behind in terms of broadband availability, with the fifth lowest broadband penetration in the EU25 at 3% of population [3] (OECD, Dec 2004), and the lowest in Western Europe. As of 2004, eircom's PR division runs near-daily advertisements for broadband connections on national media. It has been suggested that this is more to ensure that politicians, local community groups and the public at large feel that Ireland is being connected, rather than advertise available services (A large part of the population cannot take up the broadband deals). Only 60% of the population are located in the urban areas where broadband is available [4], and of these, only 75% qualify due to faulty lines (Eircom has no obligation to provide lines good enough for anything other than some level of voice communication).
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Some of eircom's DSL packages and offers have been widely criticised. In June 2005 a new product was offered, offering time-limited broadband of 20 hours per month for €19.99. Penalties on any extra time spent online are charged at 4c per minute but extra charges can only be incurred up to a further €30 (inc. VAT) after which time the user can continue to surf at no extra charge. This product is targeted at lower end users. Before eircom announced ADSL it started a telemarketing campaign aimed at customers who spent large amounts of time on dial-up connections to persuade them to subscribe to ISDN - an old inferior technology. This technology, which is not available in all areas is an alternative, albeit expensive option, in some areas where broadband is not available and ISDN is.
Eircom's corporate structure has also been subject to criticism in recent years, with accusations of poor management and overstaffing levelled at it.
After the privatisation of eircom, the highly profitable mobile phone division, Eircell, was sold to Vodafone. Some consider this act to be asset stripping by the large investors with interests in eircom.
Eircom's line rental costs have increased over the years, now standing at €24.18 per month - the highest such charge in the EU.
Broadband Roll-out
After a slow start broadband subscriber numbers started to pick up in 2004 when eircom cut the price for the basic DSL service and launched an intensive television advertising campaign. eircom predict 100,000 DSL connection by year end 2004 and promise to announce ambitious further growth targets in 2005. They have stated that their strategy is to strongly grow broadband user numbers and re-enter the mobile market. Copying a similar scheme to that used by BT in the UK, they have introduced a trigger scheme for DSL enabling their smaller exchanges based on numbers of users committing to sign-up for service. BT has now discontinued this scheme, and is moving to upgrade all remaining exchanges in the UK to ADSL during 2005, (including Northern Ireland, which has the highest number of exchanges upgraded to broadband in the UK).