Dáil Éireann díospóireacht -
Wednesday, 21 Jun 1995

Vol. 454 No. 7

Ceisteanna—Questions. Oral Answers. - Mobile Phone Service.

Seamus Brennan

Ceist:

5 Mr. S. Brennan asked the Minister for Transport, Energy and Communications if his attention has been drawn to The Sunday Times mobile phone survery showing the cost of purchase in Ireland is up to 15 times more expensive than the United Kingdom for the same models; his views on whether it should be a consumer and business product available to the wider public; the investigations or action, if any, he will take in relation to the matter; and the rules his Department will lay down in this purchase price area prior to awarding the second mobile phone licence to the successful tenderer. [11465/95]

Mr. Lowry

The prices of comparable mobile phones in over-the-counter transactions are roughly equivalent here and in the UK.

The UK market has several operators and wholesalers. One of the ways in which they compete is by selling instruments at heavily subsidised prices to customers who agree to sign contracts for a number of years with one operator. The profits are then made from relatively high rentals and call charges. In fact, in many cases, rentals and call charges are cheaper here than in the UK.

The advent of competition in our market will inevitably result in different options for consumers also. Indeed, the whole thrust of my policy on mobile phones is through competition to achieve much wider penetration and ownership at affordable prices. I do not envisage detailed regulation of prices here but the competitive approach to consumer prices is an important criterion in evaluating applications for the GSM licence.

Mr. S. Brennan

I am astonished at the Minister's response to this question. He says there is no appreciable difference in the cost of mobile phones in the UK and here. The survey in The Sunday Times indicated that a Motorola flip phone was £360 here and only £19 in the UK. Is the Minister discounting that survey — presumably he has better information at his disposal? Furthermore, will the Minister explain why Telecom Éireann may be asked by the European Commission to pay approximately £15 million because a second mobile phone licence is being given to the private sector? Does that mean that the private sector auction figure will now increase from £20 million or £30 million to £40 million or £50 million? In terms of the mobile phone service, are we now moving from a monopoly to a duopoly? Where will Telecom get the £15 million to pay for this mobile phone licence? I understood from the Minister during a previous Question Time that the Commission would not insist on Telecom paying this money. It now transpires, however, that it is insisting on it and we seem to be heading towards a duopoly in terms of the provision of this service. I understand the new operator will be given a 15 year exclusive licence and will pay £30 million or £40 million for the privilege. That will not encourage competition, which we all want, but a cosy duopoly between two expensive providers of a service.

Mr. Lowry

The second part of the Deputy's question is the subject of two separate questions, Nos. 21 and 40 on the Order Paper.

An Ceann Comhairle

In that case, let us not anticipate them.

Mr. S. Brennan

On a point of order, my Question No. 5 specifically asks about the rules the Minister's Department will lay down in awarding the second mobile phone licence. The issue I raised relates directly to awarding that licence, a recent European Commission decision — which came as a shock — that Telecom Éireann would now have to pay £15 million.

Mr. Lowry

To which I will give a full response at the appropriate time when we reach Question No. 21.

Mr. S. Brennan

With respect, the Minister is not the Ceann Comhairle.

Mr. Lowry

Deputy Brennan's question does not refer to that but to the differential between charges for hardware equipment here compared to the UK.

Mr. S. Brennan

It is a long question and it deals with the second mobile phone licence.

An Ceann Comhairle

The Chair has an obligation to ensure that there is not any jumping of the queue in respect of questions tabled by Members. Let us not anticipate a question which has been tabled but not yet reached.

Mr. Lowry

The Ceann Comhairle confirmed my position and I want to be fair to all Deputies. The Deputy asked why there was such a huge differential between the cost of certain mobile phones here and in the UK. It is important to compare like with like. The Irish price is merely for the phone while the UK price includes a contractual commitment to use a particular service for a number of years. The article to which the Deputy referred indicated also that charges are higher in Ireland. That is not correct. The article failed to compare like with like. The Irish market is primarily business based. Business call rates are cheaper here than in the UK and I will forward, for the Deputy's information, details of those charges. In fairness to Eircell and to Telecom, and to correct some of the unfair impressions given in the article, Eircell's growth last year was 45 per cent. It appears that figure will be exceeded this year and applications for the Eircell service are 70 per cent higher than they were this time last year. The article in question referred to the fact that there is public apathy——

Mr. S. Brennan

There is not any other company to which one can apply.

Mr. Lowry

——about the mobile telephone service.

Mr. S. Brennan

There is a monopoly. One has to apply to Eircell. That is why the figures have gone up.

Mr. Lowry

The Deputy, when he was Minister, and previous Ministers, did not do anything about this problem.

Mr. S. Brennan

We did not invent the mobile phone. We were not that good.

Mr. Lowry

I am allowing for competition in the sector. I hope to have a second operator up and running by the end of the year.

Mr. S. Brennan

With a 15 year contract.

Mr. Lowry

The details of the terms of reference and the conditions will be published shortly and the Deputy will have an opportunity to comment on them at that time. In respect of the other questions the Deputy asked, I will be happy to outline in detail the position on the GSM licence when we reach Question No. 21. If the question is not reached today, it will be replied to in written form.

Mr. S. Brennan

I do not want to pre-empt the reply to Question No. 21 — although I am sure it will not be reached — but a major problem has arisen whereby Telecom Éireann is in effect being fined because of the Minister's handling of this issue.

An Ceann Comhairle

I want to move on to Question No. 6.

Mr. Lowry

That is nonsense. I have not mishandled anything, I have opened up competition in the sector. The European Commission has raised concerns about the competition element and I must take those concerns into consideration. However, the commitment I gave to have a second mobile phone operator in place by the end of the year will be undertaken. A contract will be awarded by then and it will be the responsibility of the new operator to ensure that a new system is put in place to compete with the existing Eircell service at the earliest possible opportunity. Obviously, I will be taking the European Commission's proposals into consideration in addition to Eircell's position in respect of the second operator.

Mr. S. Brennan

I ask the Minister to ensure that there will be real competition and not a cosy cartel.