Robert Molloy
Question:8 Mr. Molloy asked the Minister for Transport, Energy and Communications the measures, if any, he is taking to increase competition in voice telephony services; and if he will make a statement on the matter. [7132/97]
Priority Questions. - Voice Telephony Services.
The term "voice telephony services" is narrowly defined in EU law. Within that definition, the Government has decided, and the EU Commission has agreed, that the effective date for liberalisation in Ireland is 1 January 2000. I am not taking any measures to change this but I would like to see the groundwork done within the period available to ensure that competition is effective on that date. Telecommunications services other than voice telephony have been and are being gradually liberalised in advance of that date.
The Deputy should also note that the strategic alliance for Telecom Éireann was agreed against the background of this derogation and the liberalisation programme in general. No useful purpose would be served by shifting the goalposts at this stage.
In reply to an earlier supplementary question I was pleased to hear the Minister extrol the economic benefits of competition. It is surprising, therefore, that the Government seeks its derogation by not allowing competition in voice telephony services to the year 2000. Does the Minister accept that cable companies are seen as natural competitors to monopoly telecommunications companies in the deregulated marketplace? What are the Minister's views on the future of Cablelink and the possibility of selling it to an investor who would upgrade it as a telecommunications competitor?
Cable has a role to play and legislative measures are being put in place to effect the liberalisation of cable television networks, satellite services and third party infrastructures for the provision of telecommunications. Much work is being done to liberalise these areas.
The second part of the Deputy's question depends on what the market throws up. If any offers are made, they will be considered.
Does the Minister agree with estimates that excess costs in Telecom Éireann will reach £100 million per annum, which is a telecommunications tax payable by telephone consumers? Does the Minister recognise the urgent need to introduce keener competition at an earlier date so that the economy will benefit from it? Is the Minister aware that CableTel, which has begun operations in the six counties, is offering local calls at 2p for an unlimited time? By delaying competition, we are denying telephone users the opportunity to avail of cheap telephone services, which are essential for business development and to compete with world markets.
I know the Deputy is an ardent defender of competition but he should bear in mind that we have a legitimate interest in ensuring that Telecom Éireann remains the provider of choice of telephone and connected services to the majority of people. The period of derogation, which is only until 1 January 2000, was calculated to allow Telecom Éireann time to implement the changes necessary prior to liberalisation.
I do not agree with the Deputy's estimate of the extra cost to the economy. There is always an extra cost in any economy where there is a monopoly provider of services. However, some weeks ago I signed a price capping order for Telecom Éireann which required it to reduce its prices by 35 per cent over a defined period. Some time after that I was delighted to be `gazumped' by Telecom Éireann which told me it would reduce rates more rapidly. Liberalisation will not take place in voice telephony until the beginning of the year 2000. However, the process of liberalisation is already well under way in many other areas, which are just as important for the competitiveness of the economy.
The Minister will be aware that the British Government got £200 million from CableTel for a 15 year licence, which compares to the miserable sum we received for selling 35 per cent of Telecom Éireann. The telecommunications system in the Six Counties will be improved at no cost to the Exchequer because of private investment. Industry and telephone users will benefit from the huge reduction in telephone charges. The rate of decrease in telephone charges here is not keeping pace with that worldwide; our charges are outrageously out of line. The Government's insistence on slowing down the introduction of competition is costing the tax-payers an estimated £100 million extra per annum.
Both Deputies Molloy and Brennan insist on persisting with this nonsensical allegation about the strategic alliance for Telecom Éireann. The two Deputies are aware that the full return in exchange for the 20 per cent share in Telecom Éireann will not be known until we have had a valuation of the company at the end of approximately three years——
The Minister does not know how much he sold it for.
——and that the return at that stage will be considerably in excess of the figures the Deputies mentioned.
I also remind Deputy Molloy that, in the context of liberalising the market, we will also licence other operators coming into it and a choice will have to be made between getting a large amount of revenue from a licence or allowing the benefit to go to the consumers. So far this Government has made a choice in favour of the consumers.
In favour of licence holders.
The comments by the two Deputies illustrate yet again the enormous gulf in philosophy between the two parties in Opposition.
Is the Minister aware that the Forfás report, Shaping Our Future, recommended the sale of Cablelink? Why does the Government reject the advice of its advisory body?
I am aware of the report but there is no reason the Government should rush to act on a recommendation which is a statement of view.
We know the Labour Party dictates the policy.