JOINT COMMITTEE ON COMMUNICATIONS, MARINE AND NATURAL RESOURCES díospóireacht -
Thursday, 2 Oct 2003

Vol. 1 No. 22

Mobile Telephone Market: Presentations.

Chairman

At today's meeting we will hear a presentation by the Consumers Association of Ireland. As members are aware, the committee has decided to conduct a review, as part of the communications module, of the mobile telephone market to include quality of coverage on a regional basis, number migration, portability, charges for calls and services such as international calls, prepaid phones, text messaging, roaming - national and international - voicemail, phone forwarding, call forwarding and the development plans for the mobile telephone sector over the mid-term period of three to five years, including the delivery of broadband services.

To structure this review and highlight for members the issues that may be of concern, it has been decided to obtain the views of consumers and the regulator before the mobile phone operators make a presentation to the committee. It is regretted that it was not possible for the telephone users group of IBEC to make a presentation to the committee. However, I am delighted it has made a formal submission which will be of great assistance to members.

I welcome the representatives of the Consumers Association of Ireland, Mr. James O'Flynn - no relation - and Ms Louise McBride. The format for the meeting is that we will hear a presentation from the group followed by a question and answer session. Before calling Ms McBride to make the presentation, I draw everybody's attention to the fact that members of this committee have absolute privilege but this same privilege does not apply to witnesses appearing before the committee. It is generally accepted that witnesses have qualified privilege but the committee cannot guarantee any level of privilege to witnesses appearing before it. Further, members are reminded of the long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside the House, or an official by name, or in such a way as to make him or her identifiable.

Ms Louise McBride

We are happy to be present to give our submission on mobile phones. I am a research journalist with Consumer Choice magazine and Mr. Jim O’Flynn is a council member and our telecommunications spokesperson.

Why are we here? Mobile phone charges are never far from the newspapers and it has come to the forefront lately that Irish consumers are spending more on mobile phones than any other European consumers. If we consider Vodafone's subscribers, Japan is the only other country which spends more on mobile phones. The operators will say that the Irish talk a lot, and many of us here would not be surprised that we have the gift of the gab, but many of us might be surprised to know that it costs us €150 more than British subscribers and €240 more than German subscribers. That is the reason the CAI decided to look into the issue of mobile phone charges. We conducted research in 2003 into whether Irish consumers are being ripped off. The research involved three surveys - one on mobile roaming, another on handsets and a third on standard mobile tariffs at home.

We looked at mobile roaming because there have been a number of recent developments which have caused us concern. First, the Europen Commission is investigating mobile roaming. It is trying to determine if there is evidence of collusion or collective price fixing among operators in the European Union. If found guilty, operators will have to pay fines and the European Commission will order an end to the collusion. Also, BEUC, the European consumers organisation, recently conducted a study of mobile roaming and found that charges were generally very expensive, often surprisingly similar among different operators in the same member state, and too complex to understand. I include two examples of that in our submission. In Germany alone, there are 137 different types of contracts with more 2,700 different tariffs, which makes it impossible to find out if consumers are getting value for money.

On CAI's own research, for our roaming survey we examined the cost of incoming calls, internal calls, international calls and text messaging and we included some background information on this in our submission. Roaming charges depend on whether one makes or receives the call, where one is calling from or receiving a call and foreign operator charges.

Not surprisingly we found it is more expensive to use one's mobile phone abroad than at home but what was most surprising was the extent of the expense. The example given in the submission is that post-paid customers of O2 and Vodafone pay about 15 cent a minute to phone a mobile on their operating network at home but in Germany it costs about €1.20 a minute, which is nearly eight times the cost. In Mexico and Argentina the cost of making internal calls is about 20 times more expensive than it is here and international calls work out quite expensive while roaming.

On texts, which we all know is the cheapest form of communication over mobile phones, this is an area where there appears to be an unjustified cost when roaming. Meteor's flat rate charge of 30 cent per text message is about three times more expensive than it is to send a text message at home. It usually costs at least twice as much to send a text message when roaming with O2 and Vodafone than it does to send one at home. Contrary to what one would think, larger players, who have better financial resources and do not have to struggle for market share, charge more. Our survey found that Vodafone has the most expensive charges for incoming calls everywhere except Hungary whereas Meteor has the lowest roaming charges for incoming calls on European networks. It also found that roaming charges for Vodafone customers in the US are quite high.

We also found that there is no real consistency in terms of the operator one chooses when one uses the roaming service. Operators will generally advise one to switch to their network when doing so because they will indicate it is cheaper to do so, but we found that in some cases, as in the first example outlined, it can be nearly half the price if one roams on the network of one's operator, but there are exceptions to every rule. For example, in the case of O2, if one is in Britain it is cheaper to receive calls on the team mobile network than on O2's and it is also cheaper to ring Europe on the team mobile network than on O2's. Our survey also found that the chances of receiving the most competitive rates on the mobile network of one's operator basically decrease the further one roams from home.

We found that prepaid charges are quite high for roaming although Vodafone changed its rates in June 2003 which improved matters slightly. O2 prepaid customers currently pay €l.20 a minute to make or receive calls irrespective of where they are. This rate is considerably more expensive than the rate for postpaid customers and the difference in the rates seems an inexcusable cost. Mr. Jim O'Flynn will talk about other research we have done.

Mr. Jim O’Flynn

I thank the members for this opportunity. Pay-as-you-go customers generally pay more than postpaid customers - those who have a bill phone - for roaming or in respect of any other service. We found during the carrying out of our survey that the adage caveat emptor - if customers shop around they will get a better deal - applies. The same applies for postpaid customers regarding the prices of handset and other charges. For instance, O2 charges €110 for the same Sony Ericsson T6668i as does Vodafone, which is rather surprising considering there is quite a difference in prices throughout Europe. The offers to customers to upgrade their mobile phones from the latest and greatest model last year to the latest and greatest model this year are usually only about €10 to €20 cheaper than buying them directly - in other words, without a contract. We found that there is not a major element of competition in this area.

With regard to how handset prices here compare to those in the UK, we have an article which we will supply to members for them to review. In that article, we found that there was not much difference between the price being paid for handsets in the UK and the price being paid for them here. However, people with bill phones or postpaid accounts have much cheaper phones in the UK. For example, O2 prices for Nokia handsets were much cheaper in Britain, or free in some cases, compared to prices here. Some operators said the reason for this was that line rentals were more expensive in Britain while handsets were cheaper. However, sometimes the opposite is the case. There is detailed information on this in our article.

We also surveyed mobile phone tariffs, the area in which people are most interested. There are three competitors in the market here; Meteor has 3% of the market while 97% of the market is carved out between Vodafone and O2. On prepaid phones, we examined the tariffs and found that Meteor generally offers the most competitive rates; however, it still only has 3% of the market. Calls to other networks during peak times are still cheapest with Meteor and at 9 cent for text messages, its rate is the cheapest for peak and off-peak times. However, at 8 cent, O2's text messages are cheaper at the weekends. We also found that the tariffs for postpaid accounts, bill phones, are quite competitive with Meteor. The cost of calls to mobile phones from the Meteor network is 9 cent for peak and off peak periods. This compares with 15 cent for O2 and 30 cent for Vodafone. Text messages at 9 cent with Meteor compare with 11 cent for O2 and 13 cent for Vodafone. Tariffs for prepaid account holders are even higher.

I will not go into the details of the prices because I do not want to bore the socks off members, but essentially customers who pay upfront for their mobile phone credit pay much higher tariffs - a substantially higher price per minute on air than customers who have bill phones. The cost of calls for such customers can be four times more expensive, 400% dearer than for other customers. There is no justification for that. That is a pure unadulterated rip off. If text messaging can be provided at a competitive rate, why is the cost of calls four times dearer for some customers? The marketplace is set up and it is basically a case of gilding the lily. I remind members that these costs apply to people who pay upfront.

Chairman

Do the representatives have information to support what they have said?

Ms McBride

Yes.

Chairman

They have documentary information which can be made available to members?

Mr. O’Flynn

That is correct.

Ms McBride

We have an article.

Chairman

No, we want documentary proof of what the representatives said.

Mr. O’Flynn

There is no concern about that. One need only note the daytime rates for some mobile operators. I will paraphrase what I say because I do not want to be quoted as regards the exact prices. We are talking about a cost of 60 cent per minute as against 15 cent a minute, four times the cost in terms of the daytime rate between bill paying customers and prepaid customers. Many people who spend a good deal of time yapping and tapping are being exploited - I do not like to use the word "rip off" too often. Many customers are not aware of the difference in prices.

It comes down to what the Consumers Association wants. Essentially, we are looking for more transparency in pricing. There are in the region of more than a thousand different tariffs in Germany. The position is not quite as bad here, but there can be seven to ten different tariffs per operator. It is like swimming in mud for customers to try to figure out how they are faring in terms of prices. Price comparison is difficult because one operator uses block time. In other words, a customer pays €40 per month, which entitles him or her to a certain number of minutes free call time and after that the customer pays a rate per minute. In the case of other operators, customers pay a rate per minute and a rental and other operators charge customers a rate per minute. Several operators allow customers some credit per month in terms of a certain number of minutes free call time, which they have bought, but a limit applies to the period in which they can carry over that credit. In other words, if I had 100 minutes per month free call time and I use only 50, that credit can be rolled over only for a certain period. Therefore, transparency is an important issue.

Another important issue is consistent and lower prices. Unfortunately, there are three players in the market and the competition between the two biggest players, who between them have 97% of the market, seems to be non-existent. There is some fancy advertising. People are being enticed to move from one network to the other, but there are only two major players in this market and they do not seem to offer tremendous price or service advantage to the consumer.

As the Consumers Association of Ireland we represent everybody in this room and everybody in this nation because everybody is a consumer. Business users are not being well served by the communications industry, particularly in the case of mobile phones, because the service is poor. It is poor because each of the networks has its private system of distributing calls - they have their own antennae and radio networks. However, if one crosses the Border to Northern Ireland, one will be charged for this service as a roaming charge but one will get the best possible signal no matter where one is in Northern Ireland.

Why can we not introduce true competition by forcing all three companies to swap their networks so the consumer gets the best possible service, even if it costs a little extra? Considering the extra amount they already charge us, that should be absorbed by the companies. They should be forced to have roaming between their networks. It would also solve the problem of the nastiness we have seen over the years where people are upset by the positioning of communication towers and transmission sites. That means people from the O2 network could use some of the Vodafone or Meteor masts when they are passing, depending on which has the strongest signal. The companies could sort it out between themselves.

The last issue is more competition. My last point laboured the idea that the networks should be shared in order to offer the best possible service. We are not seeing competition in this sector of the market. The prices for text messaging, either roaming or at home, are still high. It does not cost a company anywhere near 8 cent or 9 cent to transmit a text message that is only 160 characters in length. If one includes the spaces between the characters, the maximum size of that message is less than a kilobyte. A telephone line of the old analog style can take 56 kilobytes per second. It does not cost the companies an enormous amount of money to transmit the small bursts of data which make up a text message and it is outrageous to see prices of the order of 8 cent and 9 cent per message when the cost of sending the messages is infinitesimally smaller.

The message we are putting forward is better service and more competition. We believe ComReg needs to have its teeth sharpened. When it was set up as the Office of Telecommunications Regulation its function was to administer the regulations regarding communications. It saw itself as not having a function on behalf of the consumer. Things have improved over the years but we would like to see Eircom, Meteor, Vodafone and O2 shake in their boots when the regulator says the company must do something. The companies seem to be able to bully the regulator a little from time to time.

Chairman

That is a question we will have to put to the three regulators when they appear before the committee. I did not think they would be easily bullied.

Mr. O’Flynn

No offence, Chairman, but in the past we have seen a determined individual frustrate a tribunal for quite some time. It only takes money to be able to do it and these companies are massive in size. Unless the regulator has the right to shut them down if they do not behave, they can obfuscate as long as they wish.

Chairman

I am a little worried about that statement. There have been protracted battles and court cases between the regulator and telecom companies in recent years. Have you formally complained to ComReg and sent this information to it?

Mr. O’Flynn

We have on a number of occasions.

Chairman

Have you received many complaints from consumers?

Mr. O’Flynn

We have.

Chairman

Can you quantify the number?

Ms McBride

I do not have the exact number. What complaints do you mean?

Chairman

Complaints about charges.

Ms McBride

We have received a number on the advice line but I need to find out the exact number.

Chairman

Have you compared bills in the UK with telephone bills in Ireland for the different operators, including a UK operator who also operates in this market?

Ms McBride

Yes.

Chairman

That comparison has been made and that information is contained in the documentation you are giving the committee and, if not, it will be forwarded to us.

Ms McBride

We conducted surveys of the various operators and we have all the documentation.

Chairman

Will you give us the information on the surveys as well? We have much work to do on this issue and we would appreciate any help you can give us.

Ms McBride

Yes.

Deputy Eamon Ryan

I thank the group for the interesting presentation. It is different from what we are hearing from some of the companies so it will be interesting to square the two. I was interested in Mr. O'Flynn's comments on the shared network system in Northern Ireland. The system in place is one where the mobile phone companies are working together on a network. Can he give us more details on how that is regulated or managed? It seems one would almost need a third party to manage the network if a number of companies have access to it. If it is feasible, however, it would have the potential of achieving significant savings in so far as one network is obviously cheaper than having to build three.

Mr. O'Flynn said there is not a huge element of competition in the Irish market. He went on to say that in the pricing comparison he had made, Meteor seemed to be most competitive in price. It was offering lower prices across a range of common services, and I accept the point that it is difficult to measure it depending on whether one is looking at block charges or per minute charges and so forth. Meteor has appeared before the committee on other occasions and I got the impression that it was rather keen to increase its market share from 3% to 30%, which would be its preferred target. Why has it failed to increase market share? Given that the company is charging lower prices, is that not an element of competition in the market?

Ms McBride referred in her presentation to a concern in the European Commission about possible collusion between a number of European companies in terms of fixing roaming charges and she mentioned that in 2001 it carried out a dawn raid on the different companies. Has she any information, two years later, on the results of those dawn raids from the European Commission? At what stage can we expect a report from the Commission on collusion? Are there any findings from that work?

The other main point of the presentations is that the Irish pre-paid customers are being ripped off. That is where the highest difference is between Ireland and other countries. Is there a similar difference with pre-paid customers in other countries or is the level of pre-paid sales in Ireland unique? Is this high level of pre-paid usage a development in the market which is unique to Ireland? If so, why does Mr. O'Flynn or Ms McBride think consumers are unaware of the price difference or are they unaware of it? Are the advantages of the system such that they are willing to accept any price difference or is lack of information the problem?

Mr. O’Flynn

I will take the questions in the order they were asked. I might have given the wrong impression that a shared network exists in Northern Ireland. If a person from the South goes on the roaming network in Northern Ireland one's call goes to the strongest signal. That is what we mean when we talk about roaming. One's phone automatically latches onto the strongest available signal and, therefore, one's call will be transmitted through that network for its duration.

I am suggesting a roaming network internally within Ireland. When somebody is travelling down the east coast, therefore, their call would not disappear periodically because the network they are on happens to have its mast on the other side of the hill while another network has its mast right above their head. It would also provide an infrastructural solution to some of the problems we have had over the past ten years, particularly with regard to the location of masts. It would mean that it would not be necessary to have three or four masts in one locality. The one with the best site should be the one everyone uses. That is where we were coming from on that point. I apologise if I misled the members.

Deputy Eamon Ryan

That is fine.

Mr. O’Flynn

The second point was the price competition from Meteor. Meteor is the most cost-effective of the three networks.

Chairman

Is Mr. O'Flynn talking about consumers?

Mr. O’Flynn

Yes. It is the cheapest. The problem is it has the smallest network. As a result, it attracts the smallest number of clients. Despite innovative, clever, expensive and in-depth marketing campaigns, it still has only managed to get 3%. Industry experts and observers said that its late start due to the legal cases brought against ComReg or the Office of the Director of Telecommunications Regulation, as it was at the time, at the awarding of the third licence delayed its start-up significantly enough to almost seal its doom. The regulator's decision should be final. It does not matter whether one is the biggest or the smallest operator on the block. This is the sharpest set of teeth in the block and one's backside will be shredded if one comes across it. We call for a strong ComReg. In the UK if OFTEL, which is ComReg's opposite number, sneezes, BT catches pneumonia. That is because it will shut BT down if BT does not behave itself. That is the type of regulation we require for such a massive company. The regulator must be as big a bully as the operators, if not the biggest bully on the patch, to keep the operators in line.

It is becoming obvious that there is a big need for the people to use telecommunications. We are a nation of "yappers and tappers". We have the highest penetration of mobile telephones and the highest usage of text messaging. We have the highest per capita spend on mobile telephones in Europe, although I am not sure if we have the highest amount of time spent. There is an insatiable desire by the consumer for the produce of these companies. It is like people shopping around for petrol. If one lives in Fermoy where the price of petrol is €1 a litre, one would only pay €1. However, if one waited to get it in Mitchelstown at 75 cent a litre, one would have burnt up the value of the cheaper fuel.

We must encourage the three companies to become more competitive with one another. Perhaps by having a shared network system we could invite further companies to come into the market, like we have in the fixed line market. There are wholesalers in the fixed line market at present which use Eircom's network to deliver a call from one place to another. A telephone call from myself to Deputy Eamon Ryan, for example, may be delivered on the Eircom network, but both of us could be using different companies. That should be taken into consideration. It is technologically possible and it would be more advantageous for the consumer and the nation because lower costs would mean a more competitive environment for business.

Ms McBride

As regards Meteor, there is little incentive for someone like me to get a Meteor telephone because the most competitive rates are when one rings another Meteor telephone. As Meteor has only 3% of the market, the chances are that a person would have to ring a Vodafone or O 2 telephone which means he or she would not get the best Meteor rates. That would be a big disincentive for many consumers.

As regards the question about the EU investigation, I was in contact with the European Commission this week. It is tight-lipped about the investigation because it is ongoing. It will not release any findings. We expect some results next year. It is a huge investigation and the Commission will not release any information at present.

Chairman

Is that the EU regulatory framework?

Ms McBride

The European Commission. On the question about post-paid and prepaid telephones, we do not have any direct research on the level of take-up of either post-paid or prepaid telephones in Ireland or in Europe. We would have to conduct that research ourselves. Operators say that prepaid telephones are most popular with young students and people who do not want to sign contracts. That is probably why they accept such prices. Many consumers do not realise the level of charges.

Deputy Eamon Ryan

Would the association advise consumers not to buy prepaid telephones even if it means signing a contract for a fixed rental?

Ms McBride

I am not sure because rental is also quite expensive.

Deputy Broughan

That would mean a child would have a bill.

Ms McBride

Yes.

Deputy Broughan

I apologise for being absent for the start of the presentation. I was taking part in the housing debate in the Dáil. The survey and report are enlightening. This market has gouged the people, particularly young people in recent years. Three or four million citizens have a mobile telephone. We seem to have been set up for a complete gouging, as the Americans say. It is devastating that prepaid telephones cost four times what rental telephones cost. One is talking about children and young people. Parents like their children to have mobile telephones for security and safety reasons. It is a rip-off.

A good point was made about carry-over minutes. Is there any reason a person is not allowed to carry over minutes? Is there anything in the regulations outlined by ComReg about fulfilling contracts? Vodafone, for example, only allows a one month contract. It has been brought to my attention in the past year that many consumers have been charged for insurance which was not part of their contracts. This charge suddenly appeared on their bills. What is the reason for that? On roaming and the fact that one does not have a choice in that the network is pre-selected, Deputy Costello highlighted in recent months the unbelievable charges levied against him while he was on honeymoon.

On the competitive market, when we meet mobile telephone companies about broadband issues and mention their profits, they will always refer to the third generation licence and the fact that only one extra company came forward. They will state that the market does not look as profitable as it would appear. What is the delegation's response?

The delegation mentioned network rental and wholesaling. Is it the case that the big four in the UK, which have a smaller market share than our big two, are already wholesaling services? It is often young entrepreneurs offering cheaper prices, particularly to young people with mobile telephones.

Senator MacSharry

Has much research been carried out on the hand-sets, including their cost and life-span? That ties in with the fact that we are being levied with an obligatory insurance cost of €5 per month. I have a mobile phone - I do not want to give away the name - but it is my twelfth in 26 months. I do not work in a quarry, nor do I drop them from the top of buildings. Obviously, the insurance has paid for their replacement but has Ms McBride looked into this? I would be interested to hear her thoughts on it.

Ms McBride

We have just looked at the price of hand-sets in the UK and Ireland. That was the main survey we did this year. We have not looked at their life span. I was under the impression that one would need to sign a contract to sign up for insurance and that it would not be obligatory. I realise that if one buys a €200 mobile phone, the cost of €5 or €6 per month for insurance over 12 months is approximately €60 so it is not value for money. We have not looked at the life span of such phones.

Senator MacSharry

It would be a worthwhile exercise.

Ms McBride

Yes.

Mr. O’Flynn

I thank Senator MacSharry for that idea. On his point about having 12 mobile phones in 24 months, I can commiserate with him because I had six of them in 12 months last year, of which Nokia replaced four. The insurance company replaced two and it was some fight to get them out of the insurance company.

On Deputy Broughan's point about insurance, as far as I know it is not mandatory for them to charge for the insurance. Many people say - this is purely from anecdotal evidence - that suddenly the insurance charge appears on their bill. I recall having a conversation with the customer services person at O2 and mentioning that I would take up its insurance. Duly, the €3 per month appeared on my bill. I was not unhappy with it because when I lost my handset, through no fault of my own, it replaced it quite quickly. However, I did not sign anything at any stage. I continued to pay the insurance by virtue of the fact that, like Senator MacSharry, things go wrong with such phones, including having them stolen from the car's glove compartment. Occasionally, one has to have insurance for these things. They are now offering insurance——

Chairman

We will clarify that question when the telephone operators appear before the committee. I am sure they will have their answers and will be well briefed on today's proceedings.

Mr. O’Flynn

I do not think there is any sharp practice in it but I do think that the price of insurance is valuable to some people and not to others. It is a question of horses for courses. As a consumer activist I began by saying "caveat emptor", let the buyer beware. People should sum up what their requirements are. The insurance policies are not quite as clear-cut as people might think but that is a matter for a different venue.

Chairman

Whatever about the quality of the hand-sets, we have to be fair to the manufacturers because there is also the question of thefts, which are numerous.

Mr. O’Flynn

Absolutely, thefts of mobile phones are a big problem. In addition, people put them in their top pockets and forget that when they bend down they crash to the floor.

Chairman

Can you deal with DeputyBroughan's other questions?

Mr. O’Flynn

On the unused minutes, the Sale of Goods Act requires that if one pays for something one should get it. If there is a clause in the contract that says minutes should expire at the end of the month, it should be challenged somewhere. It is not my experience, as I am on another mobile network. For fear of advertising their wares I will not mention their name but it does not happen on my network.

Taking Deputy Ryan's point about pre-paid minutes, I found it would be cheaper for me to have a pre-paid phone. I have a spare phone that I do not use that often; I use it at weekends instead of for business. The rental on the phone is about €40 per month. I constantly have about €20 credit in unused minutes so it would probably be wiser for me to get a pre-paid system on that particular phone but I would not use it for business. The next point concerned roaming choice. I wanted to address this matter because one has a choice in the UK or any other country to select a network manually. However, one runs the risk of running out of coverage very quickly. I go to the UK quite frequently and we are recommended to stay with Vodafone because it has the biggest network over there. If one sets it at Vodafone one can run out of coverage and it is usually at the wrong time, whereas if one is on the roaming system one tends to stay in signal that little bit longer.

Deputy Broughan

The other point the Minister made at the comrade conference yesterday was that in relation to the North and us, in the Border territory one could be coming in and out between networks. Is that not a significant feature, for example, in Strasbourg and other Rhineland areas? How do they cope with that? Are they suffering the same problem as we are?

Mr. O’Flynn

We are allied with BEUC, the European consumers association. The complaints are coming in thick and fast. The Dutch consumers association, the Consumentenbond, is particularly aggravated by this point because many people living on the border with Germany have the same problem. The only solution seems to be for consumers themselves to pre-select a network. If one is on the Mannesmann network in Holland, and one sets it at Mannesmann only, one could start roaming in that network in Germany as one passes through towns. It seems to be a problem that they should resolve but it is a European issue, which is sadly outside our remit.

On the competitive market and profits, we are talking about billions of euro, not millions. That probably backs up my previous comments about the money these people have, which is running into hundreds of millions in pre-tax profits. In fact, post-tax profits are in hundreds of millions. Ireland is regarded as the two mobile phone companies' most profitable market in Europe. That, in itself, speaks volumes.

Chairman

Why is that the case? I note that what you said earlier in the summer probably helped to prompt this series of investigations, even though our work programme included an examination of the mobile telephone sector.

Mr. O’Flynn

The first thing is that, as I said earlier, we have the highest per capita penetration of mobile phones.

Chairman

Do you believe what the telephone operators say, that we have the gift of the gab? Those of us from Cork have the gift of the blarney - I am from Blarney.

Mr. O’Flynn

I must defend my fellow Corkman. The Irish are well known for their gift of the gab and are likely to talk but it is not a cynical exploitation of our ability to chat and keep in touch with one another. Basically, they set tariffs many years ago when very few of us were on mobile networks and those tariffs stuck with us through thick and thin. Ironically, I pay pretty much the same now for my mobile phone calls as I did 12 years ago when I first started with a mobile phone on the old 088 network. In relative terms, the prices have come down but not pro rata to the number of people on the networks. The number of people using these networks is infinitely higher than it was in those days when it was measured only in hundreds.

Chairman

While you were carrying out your investigation, Ms McBride, into the charges for Irish and British telephone users, did you examine the average duration of calls in both countries? If not, is there any way such an analysis could be conducted in order to prove or disprove that we are greater talkers than the rest of the world?

Ms McBride

Unfortunately, much of that information is not available, although we would like to have it. At the end of the presentation, I called on Vodafone to publish usage patterns which would show the average rate per minute or the average minute usage.

Deputy Broughan

Is there any evidence that the two big players, in particular, are offering any more attractive packages on portability? I noticed some of your colleagues said the other day that only 10,000 customers out of three million have changed networks despite all the advertisements and so on since the portability directives and ComReg brought forward portability. Has there been any attempt to make that more attractive? There is obviously consumer inertia. It is hassle to change one's bank, building society or whatever but it is also a hassle to change one's telephone company. Could ComReg or the Minister do any more to drive that?

Mr. O’Flynn

The biggest problem comes down to the word "competition". There has been little competition between the networks in terms of incentive to people to change networks. In fairness, I think O2 was one of the first off the mark in telling people they could change while keeping their number. It was followed very quickly by Meteor. I am speaking from my personal perspective and have not done any research into it but the fact remains that most of us experience that kind of inertia. It is a sad fact in this country that people do not even shop around for petrol even though one could save quite a bit by simply shopping around in one's town. Why would people bother with mobile telephones? The expression, "If it is not broken, why fix it" is one of the problems.

How serious are the mobile telephone operators about moving people to their networks? If one has one and a half million customers, does one really want another 100,000 customers or does one want another million? The marketing people will always say they want another one million customers and that 100,000 are not worth the effort. What we are looking at looks like brand reinforcement rather than real competition. We cannot prove this but it looks more like a Ford advertisement not telling people what car to buy. It is reinforcing the brand name rather than genuinely trying to attract people. People will migrate if they are dissatisfied with their existing supplier. I would have migrated a long time ago if there had been competition but, sadly, I am stuck where I am because these people provide me with coverage where I need it.

Deputy Fitzpatrick

It was said that pre-paid is four times more expensive than post-paid. The mobile telephone companies state this is due to lifestyle which intrigues me. What has one's lifestyle got to do with whether one pays up front? Surely, if somebody tells me my lifestyle will cost four times more if I pre-pay than post-pay, that will not stand up. Are the witnesses advocating a common carrier for mobile telephone calls such as Eirgrid? These companies are extremely profitable. As was said previously, they have a licence to print money. Does the regulator have powers to enforce competition or is further legislation needed?

Deputy M. Brady

What is the precise role of this group? For example, you state that 40% of the time, the charge to consumers is for roaming. How does this happen and what can you do about it? The witnesses said they consulted the operators on all these problems. What was their response? What can you do to bring prices into line? Deputy Fitzpatrick touched on something in that it is the general opinion among consumers - I have spoken to many of them - that when one pre-pays for something it should be cheaper and not more expensive. For example, if one pre-pays for one's bus or train ticket, one gets it more cheaply than if one buys one for each journey.

On changing over to new networks, I changed to a different network a month ago and it was a nightmare. It took eight days to get on to the new network. The excuse the new network gave me was that this was due to regulations by ComReg and that it was making life difficult for consumers to change from one network to another, which I found extraordinary. I would like to hear the views of the witnesses on those points.

Deputy Kelly

I welcome the representatives from the Consumers Association of Ireland. Why do we need a consumers' association? If people are careful of and respectful towards their money, surely competition should dictate? Surely, if people are sensible, reasonable and competitive, they will want to get value for services and goods. Many people mentioned roaming which is considered to be expensive. What can the Consumers Association of Ireland do to reduce prices? How many complaints does the association receive each year? From whom does the association receive complaints about mobile telephones? What are the complaints? Are they mainly about the quality or price of the telephones or the service?

Ms McBride

On the question on pre-paid customers, basically the operators said they were not really making money from pre-paid customers in the same way as they would from paid monthly customers who sign a contract and pay the monthly rental. The operators would not have this kind of income from pre-paid customers. They said that people choosing pre-paid telephones had a completely different lifestyle - for example, young students who did not want to sign up to contracts. That is from where they were coming.

Deputy Fitzpatrick

Did you sit and take that with a straight face?

Mr. O’Flynn

In common with what Deputy Martin Brady said, when one makes a purchase in advance, one usually expects to get a small discount on the face value. Someone has one's money before one spends it. It is like concert tickets on which people spend €80 or €90 but do not go to the concert for seven or eight months. The concert organisers are sitting on people's money in a high interest account for eight or nine months. The same can be said of the mobile telephone operators. However, there is one problem in that they have a distribution channel to collect that money, that is, they must collect that money from retailers around the country. Therefore, they are giving a discount to the retailer to sell the pre-paid top-ups much like a lottery ticket.

Deputy Fitzpatrick

When one goes into a shop selling pre-paid mobile telephone top-ups not only does one pay for the top-up, but there is an additional charge on top of that.

Mr. O’Flynn

Most retailers would tell one where to go very quickly if one asked them to pay for one's service. There is a margin in it for everybody.

I recall at one time there was not enough margin in the national lottery for people and they did not want to operate it until they were offered a bigger commission. The same is said of those who sell mobile phone top-ups. They get a percentage for every euro spent. While that increases the cost to the mobile phone companies in collecting their money, they have the money before it is spent by users of the service. It is, therefore, reasonable to argue that they are charging more per minute, which is almost impossible to prove. If one has a pre-paid phone how does one know what charge is being made? One only knows when one's credit has expired. If one buys €10 credit from the local dispensing machine and makes a couple of phone calls it may be necessary to buy more credit.

Consumers need a phone, the supplier can provide it and consumers will pay for it. Consumers have no way of monitoring how much they are being charged for their calls and given that they can purchase credit top-ups at a range of retail outlets, the pre-paid format should not be as expensive as it is. I accept that people are not tied to a contract, but we have seen already they do not move networks. Once the companies secure custom they seem to hold it for some time.

Deputy Fitzpatrick referred to the common carrier. We would propose that there should be a common network. It can remain in the ownership of the individuals who built it, but let them work out how they charge each other for the use of each other's network. Let consumers in Ireland have the best network, especially as we are paying the most money. This has ramifications for the economy. The more efficient our network the more attractive we are to foreign investment. In response to the question, if it is a licence to print money, I will say no more.

Mention was made of wholesale prices. There are wholesalers in the United Kingdom. A couple of years ago, one or two entrepreneurial wholesalers tried to set up in Ireland, but they were fought tooth and nail in the courts by the then Eircell. I am not sure of the present situation. Apparently there are moves afoot by some entrepreneurial individuals to wholesale Vodafone and O2 services to companies, but they do not tend to want to go to individuals.

Deputy Broughan

Does ComReg now have the power to insist on that?

Mr. O’Flynn

I am not sure. ComReg needs more power. More legislation is required. ComReg needs to be upgraded so that telecom companies perceive it to be the toughest authority in Europe to deal with because they will have access to the most lucrative market in Europe and they should understand that they will not gain access to it for nothing. We should not be seen to make life a cakewalk for those who are making vast sums of money in profit. I have no problem with profit; it makes the world go around. However, we are concerned here with hyper-profits, which are way beyond normal percentages.

Deputy Kelly asked why the Consumers Association of Ireland is needed. There is a simple reason. Despite the great legislation in the approximately 40 years since our establishment in 1966, people continue to need to be spoken for. Rip-offs are ongoing, an example being the beef labelling issue of last week, while the law continues to be unobserved in some areas. Somebody must call a halt. The members of this committee, the Oireachtas and the local authorities cannot have eyes in the back of their heads; they need feedback from the consumer. We are all consumers in our own right, but if there is no consumers' association to highlight important issues, people can make an erroneous assumption that they are looking after the consumers' best interest at a time when consumers are not being well served.

I challenge all members of the committee to fly the flag of the consumer. They should remember that they are consumers and, like others, they consume goods and services. Our role is to protect everyone. I do not have information to hand on the number of complaints per annum, but I am sure we will get information, not only from Ireland but from across Europe within a reasonable timeframe.

Chairman

I thank Mr. O'Flynn and Ms McBride for their attendance. We welcome the documents they will provide to the committee and we may have a number of questions to ask at a later date. Is the association doing anything to make the public aware of the different tariffs? For example, has it engaged on an advertising campaign to inform the public that, according to the figures, it costs 400% more to have a pay rather than an account phone? I presume the association welcomes the Minister's statement yesterday on roaming charges. He seems to be using words, such as "rip-off", which are similar to those the association has used.

Has the association had any complaints from those trying to change networks? I received a call from a person from Cork who told me he is getting 085 and 086 calls but not his 087 calls. When he contacted Vodafone he was told the transfers were being done in batches, which would result in delays.

Mr. O’Flynn

We have been getting calls over the years because it is not the first time people have changed networks, although it is new to the mobile phone networks. It has been ongoing for a number of years on fixed lines. I recently changed my main provider. The changeover was seamless until we began to notice that calls took five seconds longer to be put through. A significant number of people complain that their existing provider makes it difficult to undertake a transition.

Chairman

The person to whom I referred said he had an 086 number but last Saturday he moved to Meteor. He is getting 085 and 086 calls but not 087 calls. When he contacted Vodafone - my secretary has indicated it was O2 but it must have been Vodafone - he was told that the transfers were being done in batches with the result that there would be delays in receiving 087 calls. He said this is contrary to the regulations. Has the association received calls of that kind?

Mr. O’Flynn

I have not heard that particular complaint, but it appears to be a technical issue that should be raised by the regulator with the relevant company.

Chairman

I thank the delegation from the Consumers Association of Ireland for attending the committee. We will continue with our investigations and I have no doubt the association will follow our proceedings.

Mr. O’Flynn

Thank you, Chairman. On the question of what the Consumers Association of Ireland is trying to do, at present we research and print the articles to which I have referred in our magazine, Consumer Choice. Unfortunately, we are a voluntary organisation with very limited resources and we ask the members of the committee to lobby the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Harney, to continue to fund the organisation because we cannot go on without it. We are probably the most underfunded organisation of our type in Europe. We work on a shoestring. I and the rest of the board are volunteers. From that perspective, we do what we can. We could not proceed with an advertising campaign unless it was paid for.

Chairman

Has the association been in contact with Ms Foley and her organisation and the Competition Authority to discuss these matters?

Mr. O’Flynn

We work closely with Ms Foley and the Competition Authority, but, again, we are trying our best to work within our financial constraints. Essentially, we work from the subscriptions of our members. It is very difficult for us to embark on what would be very ambitious campaigns, although we would love to do so. Our colleagues in the consumers' association in the United Kingdom have 600,000 members whereas we have just 8,000.

Chairman

I thank Mr. O'Flynn and Ms McBride. We will suspend for a short time to allow ComReg to prepare for its presentation.

Sitting suspended at 3.20 p.m. and resumed at 3.24 p.m.

Chairman

I welcome the representatives of ComReg, Ms Etain Doyle, Mr. John Doherty, Ms Isolde Goggin and Mr. Garry Healy. Before calling on Ms Doyle to make her presentation, perhaps she would include in it the responses to a number of queries for fear that they are not addressed in the presentation.

Will Ms Doyle inform us what can be done to ensure Irish mobile telephone subscribers do not pay more than other European citizens for using mobile telephones? As she will be aware from figures released by some mobile telephone operators, the Irish market is seriously over-charged, almost to the point of being ripped-off. We want to know what role she has as regulator under the new rules and European Union regulatory framework to examine the pricing policies of mobile telephone operators in the Irish market. Has she recourse to Europe on this issue? Can she force down prices? Are there breaches of competition law standards? What remedies are available to force down prices? Can the regulator introduce a price cap or control? Would it be prudent for the committee to consider recommending to Government the introduction of more competition in the marketplace? Perhaps Ms Doyle would answer those questions in the course of her presentation.

At the end of the question and answer session, perhaps Ms Doyle could address the committee on the issue of unbundling the local loop? We are grateful to her for forwarding individual briefing to all Members of the Oireachtas who wrote to her. We will deal with the issue of unbundling the local loop at the end of the question and answer session.

Before Ms Doyle commences her presentation, I draw attention to the fact that members of the committee have absolute privilege but this does not apply to witnesses appearing before the committee. It is generally accepted that witnesses have qualified privilege but the committee cannot guarantee any level of privilege to witnesses appearing before it. Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or any official by name or in such a way as to make him or her identifiable.

I take it that, as chairperson of ComReg, Ms Doyle will begin the presentation?

Ms Etain Doyle

Yes. I thank the Chairman and the members of the committee for inviting us. It is a great privilege to have the opportunity to address the committee. We note the members' considerable interest in the communications market, which is very important in Ireland. We will deal during the presentation with the issues to which the Chairman referred.

Our current situation is that the new EU framework came into effect on 25 July. We are working on the market analysis we need to do to determine what remedies will apply in the market. Some matters are works in progress and we will not be in a position to say what the conclusions will be until we get there. I will describe those in further detail as we go through the presentation.

The first slide is a brief outline of how the market has developed. It begins with Eircell's 1G, the old analogue service, back in 1995. It moved on to 2G - GSM - and then the arrival of Digifone and Meteor. It then moved on to 2.5G - a service many people use. They can have e-mail on their mobile phones and send photographs and so on. It then moved on to 3G with Vodafone launching in May of this year and Hutchinson's 3G service launched on 30 September.

The next slide is a graph showing how the market developed having regard to those entries. Subscriber growth was the key driver of market development. We began in 1997. The red lines represent Vodafone, the blue O2, and Meteor, entering in 2001, is represented by the orange or tan line, which is its colour. The green line on the graph shows that penetration was only 13% in 1997 and rose steeply over the next few years. It has tapered off more recently from 76% in 2001 to 81% now. Four fifths of the population have mobile phones. While there is still growth from year to year, as the committee can see, it is not developing at the speed it was before. There is a limit to the total population here. Operators are tending to move their policies from getting more subscribers to selling higher value premium services to consumers and to looking to encouraging greater use of mobiles compared with the past.

The third slide shows some of the new opportunities which are there, building on our great friendliness in Ireland in using SMS services. The blue line shows that the service was only starting in 1999 but by 2003 the daily number of SMS calls is 5.5 million, which is an extraordinary number. There seems to have been a reduction in the second quarter in the number of SMS per user, a very small one, from 77 to 75, but we do not consider this necessarily to be the end of the growth. "You're A Star" taking place in the first quarter may be the reason for that.

The next service likely to develop and being developed is MMS or multi-media services; sending photographs by mobile is probably the service with which most people are familiar. We have included the advertisements from Vodafone and O2 to show the services of this kind which are in operation. As I said, Meteor has now entered this 2.5G market recently so I am sure we will see services from that company as well. To give an indication of the development of e-commerce by mobile - we all think of e-commerce as something that would be done by broadband or fixed line - in our last consumer survey in August this year, 5% of respondents indicated they had bought something on their mobiles, whether they had responded to an advertisement for hotel services or paid meter charges for parking their cars or whatever. That 5% by mobile is quite significant internationally at this point and gives an idea of the products which are to come.

We have some slides on pricing, in which the chairman indicated an interest. One shows the international price comparisons in the OECD basket. The OECD is an international organisation of considerable repute and it is important to look at the numbers it produces. It is also important to understand what they are based on and I have noted on the page that for the post-paid market and the pre-paid market it takes a particular product and compares that in every market. Obviously, there are different products in different markets and they need something to make the comparison. Looking at the post-paid market, Ireland is among the most expensive countries after Spain and Germany in high user post-paid, which tends to apply to business customers. In the OECD pre-paid basket Ireland tends to be down at the other end of the scale. It is notable that Meteor is more active in the pre-paid market, though it is also active in the business market, which may have something to do with this.

The next slide develops these price issues and may be of particular interest to the committee. If one takes the revenue earned by a company and divides it by the number of subscribers, looking at it for quarter 3 of 2003, Ireland is up near the top with €46, just behind Norway and Sweden. The picture on the right shows market concentration and ARPUs. This sounds fancy but it is a simple concept. One takes the market share of the different operators and the number of operators - in a country like Ireland with a small number of operators, two of whom have large market shares, one ends up quite high on the right. Two of the operators in Ireland have 96% of the market, so Ireland is quite high on this scale. Norway is even more concentrated in that way and Sweden likewise.

Chairman

Ms Doyle may have said that Ireland, Norway and Sweden were similar, to correct the record.

Ms Doyle

It should be Switzerland, thank you.

If one takes the UK, which has many more operators with much the same market share, approximately 20% to 30%, the UK is down at the bottom of the slide. We believe that it is a very interesting comparison: the smaller number of operators with very large market shares, the higher the average revenue per user. Where one has stronger competition it appears one has lower average revenue per user, which is what this slide shows.

Chairman

Does that suggest price fixing is going on in those markets?

Ms Doyle

We are not in a position to say price fixing is going on in those markets. All we are saying is that these markets show a correspondence between the high average revenue per user and the high concentration in the markets.

Chairman

Are you investigating this?

Ms Doyle

In the context of doing our market analysis we are looking at the degree of concentration as something to be examined in terms of competition.

Chairman

I am sure we will come back to this price fixing question in a moment.

Ms Doyle

The next slide gives a snapshot of where the Irish market is in relation to others and where the Irish market is relative to others over a period of time. If one looks at the graph the Irish line is the top line - the green line with "X" on it. One can see all the other lines are more or less heading in the same direction, with sharp reductions towards the end of the 1990s. The Irish line took a little longer to come down and we believe this was caused by Meteor's late entry into the market among other reasons.

The price trend has been downwards because of technological advances, lower subscriber costs and increased competition. They have resulted in bringing down the cost in all markets. The net result is that although absolute reductions have been significant, Irish retail prices remain among the highest internationally. That is the answer to the first part of the question we were asked.

Moving from specific price comparisons to the importance of the provision of advice to consumers, we have two slides on this. One shows whether consumers are aware of the cost difference in price between an on-net call - a call to the same provider one uses oneself - and an off-net call. In our last survey 46% said they were aware of a difference and 53% said they were not. If one compares that to the question, "do you choose your operator based on the network you are most likely to call", 34% said they did and 62% said they did not. It is important to have this consumer awareness and that goes back to the point made earlier about transparency. I will return to this point when I deal with what ComReg is doing.

Roaming is an issue that needs to be tackled internationally. If we dealt with roaming we might benefit all the tourists coming into the country, and we would be glad to do so, but if roaming is to be solved for all EU citizens as well as Irish citizens it has to be done on a Community-wide basis. It is regarded as a very serious issue by both the European Commission and regulators. The Commission opened a big inquiry on this issue 18 months ago, raiding the offices of a number of companies, and that inquiry is still ongoing. The European Commission has also said this is one of the markets we need to look at in our market analysis and this is one of the issues we will be looking at in the next couple of months.

This is an area in which we have taken a considerable interest to date. We prepared a joint report on consumer awareness of international roaming with Oftel last year and we also have a consumer leaflet on how to reduce costs when using a mobile abroad. We have also co-operated with Oftel on Northern Ireland issues, not just mobile, and I have met Stephen Carter, the incoming chief executive of Ofcom. The committee may know that Oftel is to be merged with this new body, Ofcom, at the beginning of next year. Mr. Carter will be the new chief executive and among the issues we discussed was the mobile market.

We have carried out a great deal of work with the UK authorities to ensure that spill-over from one jurisdiction to the other is as limited as possible, between the North and the South. Obviously, a mobile mast does not know there is a political border anywhere. The types of problems we have are ones that can be replicated in all countries. Much work has been done technologically to try to keep that spill-over to a minimum. Our leaflet advises people to switch the mobile signal manually on the phone - perhaps this cannot be done on some of the older phones but one can switch the mobile on all new phones. Members will be aware of the work the Government is doing on roaming charges generally both with its counterparts in the North and in London.

We have set out some of the problems in the presentation and I would now like to deal with our response. We sought to influence the structure of the market to attract new entrants. Generally the more entrants into a market, the more competition, which means better results for consumers. The first consultation paper the ODTR issued was on the 2G competition which we held in 1997-98. There was a court case that automatically held up the decision made by the regulator; therefore, it was 2001 before Meteor entered the market. However, the knowledge that this should be done was there from the beginning. Second, we are working on seeking to get national roaming established between operators. We hope that can be concluded between the new framework or the old framework. Third, we ran another competition for 3G last year.

In designing that competition, one of the key things was to ensure there would be more competition in the market and to get new entrants to come into the market. The competition has been successful in that there are two of the existing operators and three have just entered the market. The conditions we required under that competition were specially designed to encourage entry. They provided that the licence must provide access for what is known as MVNOs. This would mean that another could use the 3G network to provide service. Obviously, this is much cheaper than having to build a whole network and it should permit more entrants in the market.

We require that existing operators in Ireland provide for national mandatory roaming to 3G. It would enable them to use the other networks for a period, and get themselves up and running much more quickly than would otherwise be possible. We kept the fees to a reasonable level so that the operators would be enabled to move forward quickly. One of the licences provides for 80% plus population coverage, so there will be that kind of spread across the country. We permitted infrastructure sharing from the start. Every operator must do 20% of its own network but after that it can infrastructure share. We believe there are more opportunities for competition coming through in this regard.

Mobile number portability was introduced at the end of July, the same time as the new EU framework. I am pleased to report that just two months on 20,000 subscribers have changed networks. Ireland has a system operating where transfers take place in two hours. This is far better than that which operates in other countries. Initial glitches appear to have been resolved at this point.

On mobile termination rates, that is, the rate at which one operator hands over a call to another operator, ours are among the lowest in western Europe. We have been seeking to get these reductions passed on to users. Licence coverage requirements are included in the licences. We check these all the time as operators roll out.

That is one area where ComReg has been active. The second area relates to the new regulators framework. The Commission defined a standard list of markets to be regulated, which does not include a mobile retail market. The directive states that regulatory controls on retail services should only be imposed where NRAs consider that relevant wholesale or related markets would fail to achieve the objective of ensuring effective competition. As we are currently carrying out this work, I am not in a position to say what our conclusions will be. We are reviewing the Irish situation and if an Irish mobile retail market is to be included, it is subject to a potential European Commission veto. We assume we will be in a position to have a final outcome on the matter early in the new year. The Irish wholesale market, including the mobile markets in all the other countries, is provided for.

Chairman

Will Ms Doyle explain how she is carrying out the reviews? Is she contacting consumers or looking at telephone bills?

Ms Doyle

We first asked all the operators for data and a lot of information on their turnover, revenue, prices, costs and so on. We have been analysing that information, having regard to the concentration index and other key competition principles in order to establish whether or not the various markets can be regarded as effectively competitive or not. When the work is finished we will issue a consultation paper. It will be open to everyone to comment before we reach a final conclusion. After that we will take these final conclusions to the European Commission. It will have an opportunity to comment and also veto any market that is not in their standard list. Following that a decision will be reached and remedies imposed.

Deputy Broughan

Is Ms Doyle saying she has no power whatsoever to regulate these markets?

Ms Doyle

No. What we are saying is that the way in which we go about regulating these markets has changed under the new framework and that we are looking at whether or not these markets are competitive. When the directives were being drawn up all member states were involved in the discussions as to their role in relation to markets that were off the standard list. There is a process in place.

Deputy Broughan

As was referred to in the previous presentation, your association currently has no control over where pre-pays are four times the price of post-pays? Ms Doyle can do nothing about it whatsoever? Is that the upshot of this slide?

Ms Doyle

No, my association is working on the position at present. It is reviewing all the markets.

Deputy Broughan

Given the association's current powers, it cannot say to operators that the pre-pay charges are an outrage and it wants them reduced, that it wants serious competition or whatever. It does not have that kind of power.

Ms Doyle

We need to complete this exercise before we decide to impose a remedy.

Deputy Broughan

But I am saying that you do not have the power.

Ms Doyle

We could not turn around tomorrow morning and ask that prices be changed.

Deputy Eamon Ryan

While Ms Doyle cannot intervene in terms of legitimate companies charging different prices for different products, where there is inter-network price charging, in other words, going from a fixed network to mobile, it appears that is where prices in Ireland are particularly high. I received something in the post this morning and it was the first time I was informed about the cost of going from my fixed line to my mobile, which was much higher than I thought, and higher than other charges between that network. Who sets these inter-network prices? Has your association responsibility for recommending charges?

Ms Doyle

If I could step back and put this in a broader context. In many instances our office is involved in setting the wholesale rate between operators. The operator has a responsibility to produce a cost-oriented rate. We can then look at it and decide it is right, or we could say on the basis of the work we have done that it is not a cost-oriented rate. If I ring someone who is on 02 and I am on Vodafone, Vodafone will have to pass that call over to the person I am ringing. We deal with the wholesale rate between operators and likewise for wholesale rates between fixed and mobile and wholesale rates for fixed companies to other fixed operators. We have stronger powers at that end of the market than on the retail side. On the retail fixed side we have a price cap on Eircom at present. There is an overall price cap on the basket of most of Eircom's voice services, et cetera, including the transfer rate from fixed to mobile, which is what Deputy Broughan is talking about. Eircom cannot increase that overall basket of prices by more than the rate of inflation in Ireland.

Deputy Eamon Ryan

Why is it that an inter-network charge, for example between a fixed and a mobile network, is so expensive? I would have thought digital technology allows for an inter-communicality between different networks. The price of a mobile network should not be a multiple of the price of a fixed network. Why is there such a big difference?

Ms Doyle

Perhaps we could circulate a graph of the mobile termination rates.

Chairman

Ms Doyle, can you go back and explain to us about reviewing the Irish situation at present. If you find something wrong do you then go to the European Commission and is it then up to the Commission to veto the operator?

Ms Doyle

If we came to the conclusion, following consultation with everyone - we would not be just looking into our own hearts on this particular one - that the retail mobile market is not included in the list, we would go to the European Commission and discuss the matter.

Chairman

We do not expect you to have a conclusion.

Ms Doyle

We would discuss it with the European Commission. If the Commission said it did not agree with us we would not then be in a position to impose remedies. If the Commission said it did agree with us we would be in a position to do so.

Chairman

So now we will go through the remedies.

Deputy Broughan

Is it not ludicrous that the powers of ComReg are related to wholesale and other markets but it has no influence on control of prices in the retail market, where these massive profits are being generated?

Ms Doyle

The system has been set up in this way, with the involvement of the European Commission, to promote European harmonisation and to try to ensure that European countries work together. However, there is an understanding, both at the European Commission level and in the group of regulators - we are one of the groups of EU regulators - that not all of the markets are the same. The slide I showed a moment ago shows that Norway, Switzerland and Ireland are in an unhappy right hand corner. These are the types of issues we will be drawing to the attention of the Commission. It would be wrong for us to prejudge the Commission's conclusions. If something might be fought over in court or elsewhere I must be very careful about what I say at this stage.

Deputy Broughan

The Irish Government, if it had wanted to, could have insisted on ways of promoting competition in retail markets in this area. It does not seem good enough that the Europen Commission can liberalise markets and leave consumers, the most vulnerable mass of the population, unprotected. We seem to be more interested in protecting operators and breaking up networks than in promoting competition at the hands-on level.

Ms Doyle

The European Commission, the European Parliament and the Council of Ministers, which includes the Irish Government, made the decisions on the new directives. The point of this elaborate framework is to meet three objectives set in the EU regulations and which have been enshrined in the communications Act of last year. These are: to promote competition; to promote the interests of users, and to promote the internal market. It is in that harmonisation point that the internal market comes in. It is also important in terms of international roaming.

I am not saying this is the easiest system to use. It is a highly complicated system and is not, perhaps, as quick as we would have wished. However, this has been adopted and we put every effort into ensuring that our part of the job was done for 25 July. The debate took place at an earlier stage when we made our views known. This is a complicated thing to do but it is our job to get this done so that we can apply appropriate remedies as quickly as possible. We expect to be among the first of the member states to be in that position. We expect to be at that point early in the new year.

Chairman

I will allow Ms Doyle to finish her presentation. We will then hear from Deputies Ryan and Fitzpatrick and Senator MacSharry.

Ms Doyle

The remedies are on page 12. The first is non-discrimination. All customers, big and small, must be treated in the same way if they are in the same type of category. The second is transparency. This refers to the publication of list prices and giving information to customers. The third is price control and cost accounting obligations. Customers should be able to establish what costs are and to work out where prices ought to be.

The fourth is accounting separation. We discussed this when we were dealing with An Post some months ago and we insisted on separate businesses being shown separately. This gives a clearer picture of what is happening in the businesses. The fifth is access to special network facilities. The bit stream wholesale price at the moment has fitted into that category and allows other operators to have particular types of access. The sixth is interoperability. This appears in another part of the new directive. That has been used in the UK, for example, to provide for national roaming. It is one of the issues that might be looked for.

The next page covers users' rights. Under the old framework we had already established a code of conduct on complaints, which has to be available from all of the operators. This establishes that one can make a complaint to an operator, escalate the complaint and, if one still has a problem, come to our office that deals with complaints. Mobile operators were very quick to introduce itemised billing. Disconnection cannot be done arbitrarily and a disconnection policy must be set out. We have done analyses to ensure that licence obligations on coverage are met and we are currently doing an assessment of the quality of mobile service. This will cover such things as adequacy of coverage and the problem of blocked calls, which is examined by looking at things like the busy hour and whether operators have sufficient coverage on Friday afternoons.

Under the new framework there is a users' rights directive. This is the first time there has been a specific directive dealing with users' rights. We published the outline framework for Ireland in July 2003. I have given the reference number for that. This provides, first, for a code of practice for tariff transparency. We will be running a consultation in November of this year on what should be included in the code of practice and how it should be dealt with because we want to hear from other people before we conclude on that. We have already insisted that there will be a direct link to tariff information from the operator's home page to the price data and that it is not buried somewhere. One must be able to go into the front page and find the price data with one click.

Full written information must be available on request from all operators. If one does not have access to a website one must be able to get this information in written form simply by telephoning the operator. We will be updating the code of practice for complaint handling. There are opportunities to cover further areas under the new users' rights directive and we will be updating the existing code of practice and including a refund and compensation policy, which is not on a statutory basis at present. We will be issuing guidelines on the minimum contract terms. People are entitled to a written contract and to certain details before they sign up. Trying to get new entrants into the market; trying to do things to the structure of the market and doing market analysis on what remedies would follow, and users' rights are the three areas with which we deal.

The final two slides are a summary of where we are. Mobile telephony is a recent arrival on the Irish scene, yet it has 80% plus users. Voice was its original service but it now offers SMS and one in four companies is, according to a recent survey, using mobile e-mail. It needs to be brought into the broader debate on broadband that mobile has a role. Some 5% of mobile users have bought on-line. Our market analysis is under way at present and we will come to our conclusions shortly. I have given an outline on the users' rights development. There is increased international co-operation on roaming and we are now seeing 3G in this country.

This shows a range of the kind of things we are doing and I hope it covers the initial points. We are happy to deal with any questions.

Deputy Eamon Ryan

If the Chair does not mind I would like an answer to my questions before other members ask theirs because I have another meeting to attend.

Chairman

That is all right.

Deputy Eamon Ryan

Thank you. Every time Ms Doyle comes before the committee I find what she has to say fascinating. She reduces complex issues into a short presentation and that is appreciated. Unfortunately, I always seem to find myself caught having to go to the Dáil. I hope she does not think——

Chairman

That is because there are so few members in the Deputy's party.

Deputy Eamon Ryan

That is changing. We are like the 3G of politics. There are few of us at present but we are very quick and are spreading. I hope Ms Doyle does not take it personally if I have to jet off shortly.

There is a huge amount of detail in the presentation. I have just two short questions. One relates to what Deputy Broughan said. It seems that Ms Doyle does have a role in the area of wholesale or inter network rates. I cannot understand the reason there is such a big difference in the charges between a fixed line and a mobile network. Could this layman have a simple answer to explain why it is so high? Is it unusually high in Ireland?

A key issue in terms of bringing in competition is the allowing of interoperability between the different mobile companies, particularly new smaller entrants that would benefit more than others and would gain a leg-up from it. Do I understand correctly that interoperability can be built in from the start on the 3G market? Can it be reintroduced in the 2G or 2.5G market as easily?

Ms Doyle said that the UK has used the European powers provided by the Commission to insist on national roaming. Does that mean that we have to wait till the end of her review that is opening the process up to public consultation and taking it to the European Commission? Is it only then that interoperability and national roaming can be brought in or can she start introducing this prior to the whole consultation process?

Ms Doyle

I hope the Chair will not take it amiss but we do not have sufficient copies of the particular slide that shows the European average mobile termination rates to pass to everybody. I have a separate slide that I will hold up for viewing. The green line represents Ireland and it can be seen that it is close to the bottom end rather than high up. This represents the rate that mobile operators charge for the taking of calls onto their networks. The good news is that Ireland is among the cheapest in western Europe.

Our office has done a great deal of work to try to get mobile rates down by voluntary agreement with the operators. That charge is embedded where fixed to mobile calls are made. It is, however, very much higher than the fixed interconnection rates - the equivalent of what we are talking about here - which would be down in the penny and less than a penny rate. We are relatively cheap in Western Europe and that is one of the fundamental things shown there. It is, however, the case that fixed to mobile calls have been growing considerably. When we were setting the price cap at the beginning of the year we included fixed to mobile calls so that the overall package cannot rise by more than the rate of inflation. Therefore, we have put a certain control in there.

On the second question I will pass to my colleague Isolde Goggin. We have split up questions between the three sections.

Ms Isolde Goggin

On the interim operability issue, there is certainly an issue about first mover advantage in the industry. People who get in early can achieve a fairly high penetration or a high subscriber rate. It is recognised that it may be difficult for later entrants to build up the critical mass required to get in enough money to roll out their networks and so on. Our preference would be, if for instance there were a question of national roaming being made available, that agreement would be achieved between the operators themselves without the necessity for regulatory intervention. Therefore, our first best option is for a negotiated solution.

However, it appears that in the new framework there is a possibility of requiring interoperability in that sense, without having to go through the entire process of market analysis, because this is the approach that has been taken in the UK by Oftel. On new entrants, the possible downside of that is that it does not appear to tie in any particular price. Therefore, it could be made available but it is not clear that one could direct the price at which it is made available. It is one possibility at which we will look.

Deputy Eamon Ryan

When will that directive come into play? Given that Oftel has already done it could we not replicate its move immediately?

Ms Goggin

If we decided it was in the best interests we could, but we generally prefer that the industry negotiates these solutions and comes to an agreement.

Deputy Eamon Ryan

Thank you

Deputy Broughan

I welcome the delegation and thank it for its usual professional presentation. I am wondering about the comparison between prepaid calls and post-paid calls. This is clearly of interest to the committee. Did Ms Doyle's office do any research on that which would show whether the Irish are unique in that a huge number of people use prepaid mobile phones? It is said that prepaid calls are an advantage for certain people who do not want to be tracked as they cannot be tracked on prepaid calls. Is that one of the attractions? The two tables show that there is a 4:1 ratio and the consumers association says that four times as many users use prepay mobile phones as bill-pay. That relationship seems unique across Europe. Are we unique in that such a huge proportion of our consumers are using pre-paid?

It is astonishing that we are only now doing a market analysis on this. Ms Doyle talks of mobile telephony as a recent arrival on the Irish scene. It is not a recent arrival. I am almost 11 years in the Oireachtas. When I arrived here there was a partnership Government between the Chair's party and mine and one of the striking things was that all the spinmeisters and the highly paid managers of the time had mobile phones. These, and our top civil servants, were the first people that I saw using mobile phones. They are around a lot longer than a few years.

However, the tables show that it was in the past four or five years that things really started to move. Is there an element in the way we managed that market that perhaps held back development of the market, particularly the competitive market? Were we too slow in trying to ensure that we had additional 2G and beyond competition?

The presentation signs off saying we now have 3G. However, O2 says it cannot provide 3G yet but perhaps will be able to provide it next year if finances permit. Vodafone says we will not get 3G until it suits Vodafone. The reality is that we are not getting 3G. Hutchison Whampoa is the one company we got to come into this market. Therefore, are we not going to be on the back foot in regard to 3G. When will we have 3G?

The legislation governing ComReg is something to which we will have to return. Most people would probably agree that ComReg should have a bigger remit and stronger powers. Our gut instincts, and what we heard this afternoon, clearly tell us there is a need for stronger powers. Did we manage the market so far well enough? Are we still managing it properly or will we be left behind when we get into the 3G era? On the retail market, what has ComReg done about that issue of carry-over minutes? We are contracted. We bought a service and we did not get it for people who are on bills. What has ComReg done about insurance? What is being done to protect people being ripped off? There is the matter of additional items being added to bills which the customer does not remember requesting but for which the companies are happily levying charges.

Ms Doyle spoke about the complaints mechanism. The difficulty I have often found with the two big operators is that they are quite difficult to contact. At one time they had a presence on the High Street and one could walk into Vodafone or O 2, for instance. In the past Eircell had a big store very near this building but it is no longer there. Unless they are chasing one for moneys owed, they are quite difficult to contact. I wonder about Ms Doyle’s statement about complaints mechanisms and so on. Even in relation to number portability, as mentioned by Deputy Brady, the real experience does not seem to be the same as that presented by ComReg. I may come back with some other points later.

Ms Doyle

I thank Deputy Broughan. I will deal with some of the points and Mr. Doherty will deal with the remainder.

I refer the committee to the slide on page 5 of the presentation dealing with the prepaid and post-paid market. The position in Ireland is that the prepaid market represents about two thirds of the total market. In other countries it tends to be a little bit lower and very low indeed in some countries. Ireland tends to be among the countries with a higher prepaid grouping at present.

The second question was why ComReg had not undertaken a market analysis earlier. This system of market analysis was only introduced with the new framework. Prior to that, its powers in relation to the mobile market were contained in a series of earlier EU directives. Powers in relation to pricing might not have been all that satisfactory either. In the earlier years ComReg had concentrated on getting more competition into the market. The committee may be aware that the 1996 legislation stated that if we were challenged in the courts, any decision of ours would be automatically suspended. Once there was a challenge against our decision in mid-1998, there was nothing to be done but to wait until that challenge was finished in 2000. Six or nine months later, Meteor came into the market.

If the committee studies the information in our presentation about international pricing changes for mobile calls on page seven, it will see that it shows that Irish prices were very slow to come down in 1998 and 1999 when we would have thought there would have been another operator in the market. The real growth in subscribers happened in those years. Meteor came at the end of that period and we believe it certainly had an impact on its ability to take significant market share. ComReg is undertaking this study now because it comes under the new framework.

On number portability, there have been a small number of customers who had significant problems. Our understanding is that as of this morning there are ten cases with problems and they are certainly not outstanding for a long time. The process is one of the most complex processes to be introduced. I say that the two-hour transfer in Ireland is very good when compared with other countries where in some cases it can take one week to make this transfer and some cases have taken longer. The committee will appreciate how inconvenient that would be. A customer may be given a temporary number for a period and then the old number is returned to them. We may have had a few little glitches but compared with mobile number portability in other countries, we have a good system at this point. Transfers have been made by 20,000 people as evidence of that. Mr. Doherty will speak about the more specific users' issues.

Mr. John Doherty

ComReg has worked with the operators in terms of ensuring that end users are protected. If one looks at the totality of the picture, end users are protected in a range of areas such as itemised billing but in most areas mobile operators have gone beyond their position. They display a contact number on the bill that the consumer can telephone. Complaints against mobile operators make up approximately 12% of the total complaints we receive. ComReg's position has been to try to ensure that the operators have the systems and controls to deal with customer complaints but if that fails ComReg is available and will intervene to try to settle consumer complaints. Traditionally ComReg has been very successful in using its good offices to get the operators to co-operate.

Mobile telephone companies are relatively responsive in this regard and ComReg has been very keen to instil the desired requirements into their codes and practices to ensure that they do not try to pass the issues to someone else. The primary responsibility for looking after their customers is with them but ComReg is delighted and willing to step in should that not be the case.

Chairman

I will allow some questions from Deputy Fitzpatrick, Senator MacSharry and Deputy Brady.

Deputy Fitzpatrick

I welcome the delegation to the meeting. Deputy Broughan mentioned that prepaid mobile phone charges are approximately four times the cost of post-paid charges. I understand that prepaid charges make up a large percentage of total telephone income. It appears to the committee that this is a fairly ludicrous situation. If one pays up front one should not pay more than if one pays a month in arrears.

Each mobile phone company has its own network, its own physical infrastructure. Is there not a case for a common carrier with common infrastructure? For instance, the ESB is being broken up into component parts but Eirgrid will become a common carrier of electricity.

The presentation discussed wholesaling but really only in the context of passing calls from one operator to another. My understanding of wholesaling is that anyone can buy up a block of time or a block on the mobile networks and sell it on to consumers as happens on the fixed line network. Why is that not the case here? It would introduce an element of competition that might produce results faster than new people coming in and setting up very expensive infrastructure.

I regard the pricing structure and how it is computed as being opaque. I cannot but conclude that while the pricing may be opaque, the end product, the monthly bill, works out at about the same on the different networks for the time used. I do not wish to use the word "collusion" but I think that somewhere along the line there is a meeting of minds between the people in the different mobile phone companies as to the price to be charged to the customer.

Chairman

If the Deputy does not mind banking those questions for a moment I will ask Senator MacSharry to put his question.

Senator MacSharry

My question will require just a "yes" or "no" answer, so the delegation may answer Deputy Fitzpatrick's question first.

Ms Doyle

I will take one or two of the questions and then pass on. I thank the members for their comments and questions. I understand the committee was given a presentation, which showed that pre-paid services were far more expensive than post-paid services. We would not be aware of where these statistics came from and were wondering whether they include the rental charges that the post-paid people pay. We would certainly be very happy to look at what the numbers are.

Chairman

Have there been any complaints from the Consumers Association of Ireland? Have you received any documentation on the work it did in highlighting high mobile telephone charges here?

Ms Doyle

We receive Consumer Choice magazine, but I am not aware——

Chairman

Has there been a formal complaint? I put that question to the Consumers Association of Ireland when its representatives appeared before the committee. The record will show them confirming they had made complaints.

Ms Doyle

We will certainly check that one, but I am not so aware. We will check it and report back to the committee.

On mast sharing, site sharing, etc., I could not agree more with what was said. We would very much like to see more sharing between the operators and as part of the 3G competition, we gave the competitors the opportunity to make bids to share networking infrastructure - to share sites and masts. All three operators have agreed so to do and there is a code now on our website about sharing. We have also provided for what is known as infrastructure sharing which would be the sharing of the networks and as I said the operators have to build 20% of their own networks and then we would agree to their sharing.

Unlike the electricity sector, this kind of sharing would be very new. All over western Europe operators are looking at how this sharing could be achieved, because it is believed it would save a lot of money for all of the operators and it would also reduce the amount of infrastructure that has to be paid for eventually by consumers. Not all of the technical issues have yet been solved. However, this is a good question that the committee might put to the mobile operators who, I believe, will appear before it.

The next question concerned reselling on mobile networks. There was a company that resold on one of the networks in the past, but following a court case that came to an end. Again, it is true that when we were looking at the 3G competition we were looking at it against the background of the development of competition in the market and we provided for MVNOs, which are mobile virtual network operators. They need a small amount of network themselves and beyond that they can piggyback on the network of someone else.

I would like to pass on the questions on pricing to consumers to Mr. Doherty.

Mr. Doherty

As members have seen in the presentation on slide 13, part of what we are doing going forward is looking at the code of practice and doing a consultation in November on tariff transparency. We share the view that informed consumers, per se, are another way of ensuring maximisation of competition and we are trying to look at ways of getting the pricing to be more transparent so that consumers can look at the various prices and discounts, and can make an informed choice about what best suits their particular circumstances. We intend to do that by identifying a number of methodologies as to how that can be done and will do a consultation on that in November. I think that will sort of help.

We are working with consumer groups on a constant basis to get their inputs into this process. If I am to be candid, one of the challenges for us going forward is that there are some very complex ways that one can ensure price transparency and I suppose as a commission we have been of the view that if we can get a simple robust system which enables the majority of the people to access it that is better than something that is highly complex. I suppose that is what we are working towards at present.

Deputy M. Brady

Deputy Broughan mentioned portability. Ms Doyle said it is now very easy to transfer from one system to another. I outlined a personal experience to the previous delegation that appeared before the committee. It took me almost a week to get transferred from one system to another. After three days of making numerous phone calls, I was instructed to send a copy of a telephone bill and a copy of my passport to the company. Having done that, after another few days, I was told to call into the nearest retail outlet to have a special code inserted. All this took eight days during which I was without any service. I asked why it took so long, and I was eventually told it was due to a new regulation on transferring between suppliers introduced by the regulator. What is involved in transferring and how difficult is it? I am not the only one: I heard somebody on one of the phone-in radio programmes who had a similar experience.

Chairman

I also raised this earlier, as I had a call from a constituent who transferred from Meteor last Saturday and he is receiving his 085 and 086 calls but not his 087 calls. He has been told that the transfers are being done in batches and the change would result in a delay in receiving 087 calls.

Senator MacSharry

There is a wide variety of problems and we are all interested in trying to make improvements for the consumer, particularly on pricing. Given the process to which she has to adhere, the parameters under which she must work and the powers she has been given under the legislation, is Ms Doyle confident that in time we will be able to deliver a fair, equitable and competitive mobile phone market for the consumer? If so, what is the approximate timeframe? If not, will it be necessary for this committee to revisit legislation or through the Minister, the Government and our European representatives deal with it on a European scale?

Ms Doyle

On the mobile number portability issue, there were some serious problems for a small number of customers. If I may speak for my colleagues without even asking them, we never made the production of passports or anything like that part of a specific regulatory requirement. We were disappointed that there were problems as we spent 18 months or more developing the mobile number portability and I agree with the operators that this was a highly complicated process. We were disappointed that there were problems, but I am at a loss to understand what the remark made to Deputy Brady could have meant. I trust that his phone is now working satisfactorily.

Deputy M. Brady

Yes, it is.

Ms Doyle

I am glad to note that is the case. If it were not, I would wish that if he had not solved it with the operators, he would have raised it with us. Likewise, I am also at a loss on the comment that calls are being transferred in batches. The committee will have the opportunity to put this question to one of the operators and if a consumer continues to have problems and an operator does not fix them, we would be happy to come in behind him on that. As I said, there have been 20,000 customers who have transferred in the space of two months. It is a large number, but we want this service to be very effective for consumers here; it is of benefit to them.

Senator MacSharry referred to a fair and equitable market. Let me put it this way: the new regulations came into effect very recently. Only five countries, including Ireland, have actually got the system in place. We are all a bit daunted by the amount of research, analysis and additional work that needs to be done to get the thing moving forward. I would be very pleased to note the point the Senator has made that users are far too important and if it needs to be changed, the effort will be there to make that happen. However, let us get through the system first.

Senator MacSharry

Is that a "yes" or a "no"?

Ms Doyle

I am saying that it looks very bad at the moment but it may be better within a year.

Senator MacSharry

It is a "maybe" and that is final - is it?

Ms Doyle

The Senator is far better at this than we are.

Deputy M. Brady

I received complaints from some consumers about nuisance text messages. I thought these could be blocked in the system. Having made inquiries, I was informed that one has to report the matter to the Garda. That is very troublesome for people who get nuisance text messages. Is there any way of blocking such messages in the system?

Chairman

I will allow a short question from Deputy Fitzpatrick also.

Deputy Fitzpatrick

On a further point on wholesaling, is there anything to prevent people who wish to engage in wholesaling from buying up blocks of time and selling it on to consumers? Apart from any technical problem, is there any legal or commercial obstacle in that regard?

Ms Doyle

On Deputy Brady's question, there is a code of conduct operated by Regtel, which is the premium rate regulator. Those rules are designed to stop unwanted messages and calls. This area will need attention - people should not be subjected to unsolicited text messages. The matter will be covered by the data protection directive which is to come into effect here at the end of October. One of the matters it deals with is the opt-in, opt-out issue, i.e. whether a consumer can opt out of receiving unsolicited messages or has to notify everybody concerned. I assume the Oireachtas Joint Committee on European Affairs may be looking at that directive in relation to the issue of unwanted messages.

Deputy Broughan

Will legislation be required to deal with unwanted text messages or spam?

Ms Doyle

It will be dealt with under regulations being made by the Minister for Communications, Marine and Natural Resources. I understand that the text has gone out for consultation at this stage and it is on the DCMNR website.

Deputy Broughan

Deputy Coveney published a Bill to control spam. Is it Ms Doyle's understanding that such a Bill is not necessary?

Ms Doyle

I suggest the Deputy should have a look at the text proposed by the Minister, which is due to be signed before the end of this month. It will deal with precisely the type of issue to which the Deputy referred. On Deputy Fitzpatrick's question, there is nothing to prevent a mobile operator from providing the opportunity referred to, but if the mobile operator does not provide the opportunity within the present rules, it is not possible for us to insist that they do so.

Deputy Fitzpatrick

Do I understand correctly that it occurs on fixed lines?

Ms Doyle

Yes - the rules are different between the two systems. However, this will be part of the background to our providing for MVNO in the new system.

Deputy Broughan

On 3G, is Ms Doyle disappointed that the two existing operators seem to have put the matter on the back burner? In the view of many people, 3G opens up a situation as revolutionary as mobile phones were initially, both in economic and cultural terms. However, the recent response from the company seemed to point towards late 2004. Is there a specified timeframe within which the company can be compelled to roll it out? On the networks, is it the position that the three operators will only share a quarter of the networks in 3G? Will each have to build 25%?

Ms Doyle

They have to build 20% each and after that they can share. Accordingly, up to 80% of each company's network would be shared. There are particular rules for this: each of them must be in a position to operate its network separately, providing separate services. One cannot have a situation whereby if one switch goes down, every mobile phone in the country is cut off.

Deputy Broughan

In other words, the companies cannot decide on a 20:20:20 basis.

Ms Doyle

No. It refers to 20% of the company's own network, after which it can share. I am sorry - I missed the Deputy's other question?

Deputy Broughan

Is the pace of 3G a matter of disappointment?

Ms Doyle

Internationally, many people are disappointed at the pace of 3G. The operators would point to the €135 billion in advance taxation paid in auction fees and so on. There was a certain amount of froth on the market at that time, which has not proven to be justified. In the Irish situation, the two operators have met their licence requirements. I would welcome quicker expansion of 3G, but I understand the issues involved. I believe each of the operators will appear before this committee very shortly, when they can provide a fuller explanation directly on their plans for this service. It is now available from two operators and the third will be operational before Christmas. We are closely monitoring their licence obligations which, I am pleased to say, are being met so far. I would like to have the service in operation instantly, but I do not anticipate that the wait will be as long as has been indicated to the committee.

Chairman

Thank you. Before we come to the unbundling of the loop, I refer to a number of questions which I put to Ms Doyle, some of which she has answered in her presentation while indicating that she cannot say very much until she has carried out the review. In particular, I asked if she and her colleagues would wish to offer any opinion as to whether it would be prudent for this committee to consider a recommendation to the Government concerning the introduction of greater competition to the market. Perhaps Ms Doyle may wish to answer that.

First, however, I wish to set the record straight with regard to a number of accusations which were made today against ComReg, so that its representatives will have an opportunity to answer. It is important that nobody takes any conclusions from this meeting until we have met the mobile telephone operators to hear their side of the matter. It is, of course, our wish that the graph produced during today's presentation would slide down from its present level of €46 per month to a figure more in line with that which applies in Portugal, Greece or other countries. I believe the mobile telephone operators will be anxious to see the transcript of today's meeting and, indeed, to respond accordingly at their scheduled meeting with this committee on 15 October.

ComReg has been accused of being bullied by telecom companies. That is a serious charge on the part of the Consumers Association of Ireland, which has suggested that ComReg "is the biggest bully on the block". I would like to hear ComReg's response to that. Also, is ComReg receiving a massive volume of complaints on high charges for mobile telephone services to Irish users, or do such complaints usually go to the Director of Consumer Affairs, Ms Carmel Foley? Has ComReg any interaction with the Competition Authority on these matters? This committee does not wish to expand the scope of its inquiry if that is avoidable on the basis of all the required information being available within the ComReg office.

I invite Ms Doyle to respond to those matters, following which we will move on to discuss the unbundling of the loop. That issue does not concern the mobile telephone operators - they can relax.

Ms Doyle

Thank you, Chairman. I will deal with some of the questions and pass on others to colleagues. More competition in the market is something we are always anxious to see. The present position is that three 3G licences were issued last year; we have a fourth one sitting on the shelf and would be delighted to issue it if there was interest in that regard. It can be on the basis of the 2G plus 3G spectrum which we have available. There is an indication from the biggest fixed line operator in the market, Eircom, that it would like to re-enter the mobile market. Whether it will do that by buying into some other operator, or seeking that 3G licence, or becoming an MVNO or whatever, is a matter for Eircom itself initially.

Deputy Broughan

What is the price of the 3G licence which is currently on ComReg's shelf?

Ms Doyle

The price which had to be agreed with the Minister for Finance involves an up-front charge, as it is now structured, of €44 million.

On the question as to whether we are bullied by operators, the operators speak to us in as many tones of voice as they can manage. I do not believe we have responded in a comparable way to such bullying, if that is the term the Chairman wishes to use.

Chairman

That is the term that was put on record today at this meeting.

Ms Doyle

We are very firm in looking at our obligations and responsibilities and, in response, dealing with all of the issues. We are not afraid of anybody and will continue to work on behalf of the Irish consumer in fulfilling our statutory obligations. I speak for all three of us, although with John Doherty's bulk, I might have left the answer to him. We take a very strong view. We have a track record that proves that we are willing to take stands that may seem unpopular in the short-term, or which may be difficult vis-à-vis the operators, but we will certainly do that.

Deputy Broughan

Ofcom has been established in the UK, which has a longer history of communications regulation than Ireland. Does Ms Doyle think that a similar regulator will be developed in Ireland?

Ms Doyle

Oftel was established in the UK in 1984 and a radio spectrum agency was set up in the late 1980s. ComReg is ahead of the UK, in some ways, as it was established in 1997 to cover telecommunications, radio and mobile communications and the broadcasting networks. Content, is the only area that Ofcom will cover that we do not cover, has been examined. There are as many, if not more, arguments against including content in ComReg's network regulation powers as there are in favour. ComReg also deals with posts, so one can say that Ireland has got that far. It is certainly true that many of the issues that have arisen for ComReg as the first sectoral regulator in Ireland are more recent and better remembered than the battles in the UK. Legislation to alter the role of the regulator has been passed on a couple of occasions over the years. The Oireachtas has had an opportunity to examine what one is looking for in a regulator. This area has become more understood and established here. I will not say that the operators have accepted us completely, but some of them have become much more used to the fact that one of the things they have to do is to take account of what we are in the business of dealing with.

I will pass the question of mobile telephone charges to Mr. Doherty. ComReg has a close working relationship with the Competition Authority. We have involved the authority in our steering group dealing with market analysis, which is chaired by Ms Goggin.

Mr. Doherty

ComReg works closely with the Office of the Director of Consumer Affairs, generally speaking, on issues that arise. About 12% of the complaints we receive are related to mobile telephone matters. The majority of these complaints relate to billing issues, roaming and customer service, rather than a myriad of other issues on the high cost of mobile telecommunications per se.

Chairman

Is that because people do not realise the costs in other markets?

Mr. Doherty

People who travel abroad are increasingly aware of the differences in some of the costs.

Chairman

Does ComReg not have a role in advising people, as it did in the excellent pamphlet on roaming charges? I am aware that a copy of the pamphlet was sent to every Member of the Oireachtas and I thank ComReg for that. Are the leaflets available in all mobile telephone shops? Can they be placed in all such shops on a regular basis, so that people can be informed? Should there be an obligation on mobile telephone operators and their franchisees to distribute such information? I wonder if ComReg's role should include making people aware of the different charges in different markets. People should be aware of the different prices.

Mr. Doherty

We will look closely at the issue of price transparency as part of a process we will be undertaking in November. As a way of sustaining, maintaining and driving competition, we will try to ensure that end users are informed. Part of our role will be to try to provide consumers with as much price transparency as possible in that area. I will finish by taking up the Chairman's idea about the leaflets. Information is available at most airports and other places where people leave the country. Leaflets are circulated to consumer groups. We are constantly examining the best places to position such leaflets - we do not just supply them to Members of the Oireachtas. One can acquire a copy of such leaflets at Cork Airport or Dublin Airport. They are also available in public libraries. We are constantly updating our consumer leaflets to try to ensure that consumers are informed, as far as possible.

Chairman

We will briefly discuss the unbundling of the loop. I thank the delegation for its patience and time. The Minister will be in attendance at 5 p.m. to discuss the Electricity Regulation Act 1999 (Eligible Customer) (Consumption of Electricity) Order 2003. Some members of the committee have long journeys ahead of them tonight. I hope we can finish this fairly quickly so they can avoid the Dublin traffic.

I thank the delegation for the briefing note it forwarded to us and which we have read. Does Ms Doyle wish to give the committee a short summary of the note? Deputy Broughan may wish to ask one or two questions.

Ms Doyle

I thank the Chairman and the members of the committee for the range of questions that were asked. It is always valuable for us to have some perspectives in terms of where we are going forward. I will deal with local loop unbundling in particular, as well as a couple of other matters that were raised.

Eircom has a direct obligation under EU law to provide local loop unbundling, which is extremely important in terms of providing competition in the market. The OECD has conducted a number of surveys that show that if one does not have competition, one does not have much roll-out of local loop unbundling. It is a key component in the provision of broadband services. Ireland is almost unique in Europe in not yet having a fully cost-oriented price for this product, three years after the EU obligation came into effect. This uncertainty, allied to the fact that it took nearly three years to agree an appropriate process, contributed to the fact that Ireland is near the bottom of the EU broadband league. We have been here before. We are aware of the concerns of Deputies and Senators on moving forward on this issue.

Irish line rental costs are among the highest in Europe. Eircom sought a further increase, to around €27, in the LLU component of this earlier this year. This would result in further significant increases in line rental costs and would increase the burden on Irish consumers and businesses. It is important to understand that ComReg's analysis resulted in a price less than twice that in the country with the lowest LLU price - €8 - and Eircom's figure was more than three times as large. We are glad to report that legal proceedings, taken by Eircom in this regard before the summer, have been withdrawn and that the case has been settled. I explained earlier that ComReg is now involved in market analysis and this is also true in respect of the LLU market. We are very anxious to be in a position to move the process ahead and to receive a market price that will meet Eircom's legal obligations and will provide for a competitive market so that people can get broadband.

Questions have also been raised in respect of carrier pre-select and the CPS service, which is the shift from one operator to another. A huge churn of customers had been endangering the product. We recently issued new arrangements that provide, in particular, for a quiet period during which consumers can test the new service. We believe this is extremely important to bring stability to the market and to maintain this service in operation. Additional tariff transparency, which we are prioritising this autumn, is necessary to ensure that all consumers are properly informed.

The CWU raised workers' questions about the provision of USO, which happens in all countries. The Minister must consent before we designate a USO operator. There is a provision that a USO fund can be set up if there is an unfair burden, but few countries have seen the need to provide such a fund to date. There are benefits in being the USO operator that may balance out the costs. We take very seriously our responsibilities in this area. We do not make any decisions that are not thought out or are arbitrary. We conduct a great number of consultations. We want to be open and we want to hear what people have to say. We do not accept the suggestions that we are in any way unaccountable, that we are unwilling to take account of public scrutiny, or that we make decisions that are in any way unbalanced or impartial. We see ourselves as quite the contrary.

Chairman

Deputy Broughan will read that document into the Dáil record.

Deputy Broughan

What does ComReg expect will happen in March 2004 on local loop unbundling? Media reports suggested that Eircom was not incredibly unhappy with the price of €16.81. Ms Doyle says the average is only half that figure. Many people consider the local loop to be important to the development of full competition.

Concerns about the universal service obligation and our geography were raised with Deputies by members of the Communications Workers Union and workers in the companies. When the mobile phone operators come before the joint committee next week a dominant theme of their submissions will be that ours is a pretty large country in which to maintain a network given the small population. In the similarly sized territory of the UK there are perhaps 30 million customers with as many again in the smaller territory of the north Rhine and Westphalia in Germany. Is it not, however, the case that the universal service obligation is quite important in Ireland?

In a remote village which I know well on the Beara Peninsula of south west Cork, Eircom was asked to restore the local public payphone. People might say that mobile phones have eradicated the need for phone boxes, but coverage in such areas is so poor that one must climb the spire of the local church to get a signal on 086. The 087 network there was quite bad until two or three years ago. The throughput of money in the phone box in question was perhaps €10 per week and I had to make the case to restore it very strongly to Eircom after local Deputies failed to achieve a result. Coverage is poor in this mountain-ringed territory that receives many visitors who wish to call Germany and Holland. I argued that the phone box service should be restored under the universal service obligation. The obligation is a heavy burden here due to the small population that is dispersed over a wide territory.

Ms Doyle

Regarding LSU, I cannot account for Eircom's view. The company took a court case out of the way which lets us get on with what we have to deal with.

Deputy Broughan

The journalists said they looked quite happy.

Ms Doyle

Any court case is less satisfactory from our point of view. We have a responsibility to update pricing in the new framework and we will make our decisions without fear or favour. At the end of the process it is up to Eircom to introduce the price we have decided. Under the new legislation, the company is entitled to appeal and while I hope it sees that it is time to deal with the matter I cannot speak on Eircom's behalf. We are working to have a new price ready early in the new year.

I will pass the questions on our geography, payphones and the universal service obligation to Mr. Doherty, remarking only that Ireland has a fixed line penetration rate of 80%. There are 250,000 households in Ireland that do not have a fixed line which means the universal service obligation here is lighter in many ways than it is elsewhere.

Mr. Doherty

There are about 7,000 payphones that fall under the universal service obligation. We have developed a particular USO arrangement that prevents the removal of single telephone booths or single units. We are requiring Eircom to produce a strategy to advise us going forward of its requirements in this area. The company must consult with the local community to which it must make a formal announcement before a phone is removed. We have tried, in so far as we can, to ring-fence telephone booths, particularly those in remote rural locations where there is a single booth in place. Clearly, this is an evolving process and there may be cases in which communities change and logic demands the removal of a phone. However, before a removal can take place there will have to be consultation with the local community and ComReg will have to be advised.

Chairman

I thank Ms Doyle, Mr. Doherty, Ms Goggin and Mr. Healy for attending today. The joint committee looks forward to the ComReg review of the EU framework. We will send a transcript of what was said earlier in this meeting. ComReg will be conscious of the concerns of the joint committee on mobile phone charges. We will continue our inquiry with the mobile phone operators. If we need any additional information from ComReg, I hope it will be forthcoming as it always has been.

Ms Doyle

I thank the Chairman. We would be very happy to assist the joint committee in any way.

Chairman

We also ask ComReg to request the documentation the Consumers Association of Ireland has indicated it will send to the joint committee.

Sitting suspended at 4.55 p.m. and resumed at 5.05 p.m.