1. Presentation to the Oireachtas Joint Committee on Communications, Marine and Natural Resources 28 January 2004

2. Snapshot of the situation Regulatory control of a monopoly price relaxed –line rental has increased to EU highest –controls need to be tightened Alternative service not available –Consumers have no choice for line rental –Alternative must be introduced as soon as possible

3. Introduction to ALTO Industry group representing new entrants in Ireland’s telecomms sector Objective is to create a competitive market Members include Meteor, NTL, Esat BT, ESB Telecom and MCI ALTO members employ over 2,500 people and will invest approx €100m this year Members provide a wide range of services in all sectors

4. State of competition (Residential/SME) Competition introduced in January 2000 ( ‘Carrier Pre-Select’) –customer can move phone calls to another provider –but must retain their line rental with eircom (2 bills) 10% market share for new entrants - EU best is approx 30% Significant churn of customers - up to 80% in one month Eircom sales tactics (ComReg ruling) Eircom line rental monopoly is key inhibitor for real choice and competition

5. Price of calls (EU ranking) V Line Rental

6. Controlling eircom’s Line Rental ComReg has power to set a Price Cap where there is no competition in the market Old Price Cap –required an overall reduction of (calls/line rental) each year –allowed increase of up to 2% on any individual service New Price Cap (early 2003) –Allows overall increase (calls/line rental) in line with inflation –No controls on prices of individual services –Applies for 3 years “may be reviewed earlier if special circumstances warrant”

7. Impact of new Price Cap Line rental highest in Europe (€290 p.a.) Competitors forcing cuts in eircom call rates Eircom can fund cuts in call rates with increases in line rental

8. Alternative Service “ Single bill” service recognised by ComReg and industry as a key enabler of competition Large consumer interest - “less hassle” Mandated by ComReg –“eircom is directed to provide …‘single billing for Carrier Pre- select’ product… by the end of January 2003 ” - ComReg (July 2002) –“The changes in treatment of line rental need to be matched by the implementation of the wholesale line rental product“ - ComReg (November 2002)

9. Project to develop “Single Bill” service Began in July 2002 - due for launch in January 2003 Huge effort by new entrants in industry working groups - 100 meetings Close to completion – but service is still not available today Every month of delay gives eircom €40m from line rental Who benefits from delays?

10. Current Status Two key issues to resolve: 1.Margin - service must deliver savings to consumers and allow new entrants into the market. Current margin is only 8.5% 2.Customer activation charge - currently €24, must be reduced to a reasonable level Service will not launch unless these issues are addressed Other issues include: Internet services - key growth area currently excluded from “single bill” Customer details may be removed from directory enquiry database

11. Way Forward Review Price Cap - re-impose tighter controls Get an alternative service into the market –ComReg/eircom must solve the key commercial issues –ComReg must set out timeline for launch of service and for addressing main concerns –Deadlines must be met - Ministerial intervention if necessary New entrants will launch

12. Presentation to the Oireachtas Joint Committee on Communications, Marine and Natural Resources 28 January 2004