Dáil Éireann debate -
Tuesday, 2 Nov 1993

Vol. 435 No. 3

Ceisteanna—Questions. Oral Answers. - Telecom Éireann Price Restructuring.

Eamon Gilmore

Question:

16 Mr. Gilmore asked the Minister for Transport, Energy and Communications if he has received any report from Telecom Éireann on the impact of the new calls price structure on the volume of calls, especially domestic calls; the budget and resources that have been allocated to the Telephone Users' Advisory Council established by him on 1 September 1993; the terms of reference of the council; if, in view of the controversy surrounding the recent change in pricing, he will consider the re-establishment of the statutory users' council provided for in the Postal and Telecommunications Services Act, 1993; and if he will make a statement on the matter.

Mr. Cowen

I am assuming that the reference to "domestic calls" in the Deputy's question refers to calls made by domestic customers. Preliminary information available to my Department from Telecom Éireann, which has not yet been subjected to independent scrutiny by the Telephone Users' Advisory Group, indicates that there has been a drop of 8 per cent in the volume of calls in the residential sector and no change in the volume of calls in the business sector. The average duration of calls has fallen by about 6 per cent.

It is clearly inadvisable to read too much into data in respect of short periods. I have not allocated a specific budget to the Telephone Users' Advisory Group. I stated at the inaugural meeting of the group on 15 September 1993 that whatever resources are required for the group to fulfil its mandate will be provided. The secretariat for the group is provided by my Department and the group also has available to it specialist analytical expertise from the analysis unit of the Department of Finance. I am making arrangements to circulate the terms of reference of the group for inclusion in the Official Report.

The following is the statement:

Terms of Reference of the Telephone Users' Advisory Group established by the Minister for Transport, Energy and Communications.

The primary purpose of the Group is:

1. to carry out independent monitoring of the operation and impact on different groups and classes of customers of the new Telecom Éireann tariff package introduced on 1 September 1993 and report to the Minister thereon;

2. to assess future trends as they relate to tariffs taking into account the rapidly changing technology in the telecommunications industry and report to the Minister thereon.

In discharging function 2 above the Group should:

—monitor developments in other tariff systems both in the EC and elsewhere and assess their relevance to the Irish situation;

—take account of market and technical developments in Ireland and elsewhere;

—ensure that any recommendations made to the Minister on changes in tariffs should take account of the need to achieve an overall balance which will enable Telecom Éireann to maintain financial viability.

The Group may also:

—examine the pattern and nature of complaints by customers in general concerning the operation of the tariff;

—suggest how Telecom Éireann might deal with consumer complaints of a general nature;

The Group will determine its own procedures.

I do not intend to re-establish the statutory Telecom Eireann Users' Council. The functions of this council have effectively been taken over by the Ombudsman under the Ombudsman Act (First Schedule) (Amendment) Order, 1984. Sections 48 and 49 of the Postal and Telecommunications Services Act, 1983, which gave statutory effect to the users' council were repealed by section 3 and the Second Schedule of the Restrictive Practices (Amendment) Act, 1987.

Mr. Gilmore

Does the Minister agree with the figure published today that Telecom Éireann is losing £750,000 per week as a result of the rebalancing of the charges?

Mr. Carey

That is extra.

Mr. Gilmore

Does he agree also with the statement made by the chief executive of Telecom Éireann that people are now scared to use the telephone? Will he accept that the rebalancing of the charges he approved has now resulted in consumers being driven off the lines and in Telecom Éireann being driven into debt, and that they should be reviewed?

Mr. Cowen

There is an inconsistency between what the Deputy said when this debate started and what he is saying now. He, and others like him on the Opposition benches, assured me that there would be increases of 400 per cent in bills. I denied that and the facts bear me out.

Mr. Gilmore

People are not using the telephone.

Mr. Cowen

It is important that facts emanate from this House.

Mr. Gilmore

I am looking for facts.

Mr. Cowen

There has been a 3 per cent reduction in total volume despite the scaremongering from the Deputy's side of the House.

Mr. Gilmore

What about the £.75 million?

Mr. Cowen

If one wants to see emerging patterns one does not base one's assessment on the first four weeks, which are the result of scaremongering by the Opposition.

Mr. Gilmore

Answer the question.

(Interruptions.)

Mr. Cowen

I am answering the question and the Deputy does not like the answer because, despite his confident predictions, the consumer is not being screwed to the tune of 400 per cent or anything like it. It is hurting the Deputy now that he has been proved wrong.

Mr. Gilmore

It is not hurting me, it is hurting the consumer.

Mr. Cowen

The more measured approach outlined by me is correct. There has been a change of pattern which I welcome, because the whole purpose of the rebalancing was to bring in incentives to use the telephone during off peak periods. It is clear that what is now required is a marketing by Telecom Éireann of its excellent product which is now competitively priced, has a commercial basis and provides us with the opportunity to have more and more jobs in the whole tele-marketing area about which there is considerable discussion at the moment. I am sorry to disappoint Deputy Gilmore, but the consumers are not beng screwed and I do not believe that the first four weeks indicates the total pattern. Despite the scaremongering efforts of the Opposition, this rebalancing has proved a success. A marketing by Telecom Éireann of its excellent product will see volumes restored. It is interesting to point out for the benefit of the House that, although the cost is significantly reduced, users have not yet increased international calls to the volumes one would expect. I am now saying they can take advantage of the rebalancing charges, opposed by the Opposition, who have been proved inaccurate. I would have expected the Opposition to stand up and admit they were wrong.

Mr. Noonan

(Limerick-East): I put it to the Minister that everybody agrees that telephone bills will go down if people do not make telephone calls. Will the Minister confirm that the £.75 million loss indicated in the first month of the new scheduling will grow to a £39 million loss in a year if maintained in addition to the £15 million loss already in the rescheduling announced by Telecom Éireann? Will the Minister also confirm that there has been a drop in usage even of international and trunk calls by domestic users even though their costs have come down? Does he welcome that change of pattern? I put it to him also that it is a peculiar commercial mandate for a commercial State company to advocate that customers use less of their service to prevent their bills going out of proportion.

Mr. Cowen

It gives me great pleasure to confirm that the Deputy's exaggerated claims were totally without foundation. It is ironic that what is being suggested now by the Opposition is that I should in some way rebalance upwards and increase telephone charges. They have been speaking for six months about the fact that bills are up by 400 per cent. I am being asked now if this position is to continue if the charges should be increased. I have no intention of doing so.

Mr. J. O'Keeffe

The Minister is blustering.

Mrs. Doyle

The Minister does not understand the question.

Mr. Cowen

I do not expect this pattern to continue. I will confidently predict that there will not be a £39 million loss. I would say to Deputy Noonan that his facility for making what he regards as confident predictions within 24 hours of information becoming available, without getting the full facts, is probably the best example in this House of the sort of fiscal unreality he engages in. The Deputy has not produced one telephone bill that shows a 400 per cent increase. At the time of the introduction of the telephone charges he claimed that telephone users would suffer a 400 per cent increase in telephone charges.

Mr. Carey

Does the Minister wish us to bring telephone bills into the House?

Mr. Cowen

I expected the Deputy to bring in a solitary telephone bill from one of the 900,000 customers that would show a 400 per cent increase in charges.

(Interruptions.)

Mr. Cowen

The Deputy's party cannot find a Fine Gael supporter who is prepared to submit a bill for one month that shows an increase of 400 per cent to support its argument. The Deputy's party has no credibility in regard to this matter.

Mr. Allen

The Minister should not be ranting in the House.

Mr. Carey

The Minister is very defensive today.

Mr. Cowen

I am relishing this.

Mr. Carey

The Minister will sell out on this as he has sold out on everything else.

Mr. Cowen

Fine Gael know a great deal about selling out.

An Leas-Cheann Comhairle

I want to facilitate other Deputies who tabled question. I call on Deputy Gilmore to ask a final supplementary question.

(Interruptions.)

Mr. Gilmore

Will the Minister remind the House when he told us that people would stop using the telephone as a result of the increase in charges and that it would result in a loss of £0.75 million per week to Telecom Éireann? Do those figures result from the fact that he based his rebalancing on a survey of a four-week period last Christmas? When does he expect that the public will start to use the telephone normally again if he considers the first month to be unreal?

Mr. Cowen

I never used that word.

Mr. Gilmore

When does he expect Telecom Éireann will stop losing money as a result of the rebalancing, which is now of the scale of losses incurred by Aer Lingus?

Mr. Cowen

There must be some consistent Trotskyite tendency to attribute words to me that I did not use. I did not use the word "unreal". In replying to the Deputy's question I must check continually to see if he seeks to give a wrong impression in regard to what I said. I never said it was unreal.

Mr. Gilmore

You said that people are not using the telephones.

Mr. Cowen

I did not. I will explain the position.

An Leas-Cheann Comhairle

The Deputy should make his remarks through the Chair.

Mr. Cowen

I said that the first four-week preliminary data does not give the definitive pattern in relation to the rebalancing proposals. I am glad that if there was an erring it was on the side of the consumer, despite the fact that I was pilloried by Deputies opposite who claim to be pro-consumer. Those Deputies have now switched horses. They are now asking me if I am prepared to give a price increase to Telecom Éireann, having for six months sought to set up——

Mr. Carey

Did the Minister increase VAT?

Mr. Cowen

I did increase VAT. Deputy Carey's inability to be rational in present circumstances is very difficult. I can understand his difficulty.

Mr. Allen

The Minister is not being rational.

Mr. Carey

The Minister increased VAT.

Mr. Cowen

I refuse to be cowed by barracking from Deputy Allen or anyone else. The total volume reduction in calls is 3 per cent in the first four weeks of this rebalance. That does not indicate people being scared. It indicates that those who attempted scaremongering have not succeeded and I confidently predict that in the coming months we will see the position in the proper perspective. If there is to be error on anyone's part, it should be in favour of the consumer. The Deputy and other members in his party have sought to damage me politically but they have not succeeded. His party has no credibility on this issue.