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(2004/C 84 E/0387)

WRITTEN QUESTION E-0184/04

by Avril Doyle (PPE-DE) to the Commission

(29 January 2004)

Subject:   Eircom telephone line rental charges in Ireland

Given the dominance of Eircom in the Irish fixed line phone market, and the fact that Ireland's line rental charges are currently the highest in the EU at EUR 22,50.

Can the Commission comment on the decision of ComReg, Ireland's telecoms regulator, to approve a telephone line rental increase from 4 February 2004 which will bring monthly fixed line rental charges at Eircom to just under EUR 24?

Can the Commission advise on the impact this will have as regards competition within the single market?

Answer given by Mr Monti on behalf of the Commission

(8 March 2004)

Under Article 10 of the Treaty on European Union, ComReg may not approve tariffs of dominant undertakings which would infringe Article 82 of the EC Treaty such as excessive tariffs. As regards the envisaged line rental charge increase by Eircom, the Commission understands that the latter is part of a process to align this charge to the underlying cost, a process known as ‘tariff rebalancing’ (1). This process involves, on the one hand, decreases of usage charges and, on the other, increases of fixed charges, such as the line rental, to reflect the change in the relative cost of the relevant network elements of digitized communication networks. Under the price cap imposed by ComReg, Eircom reduced its regulated retail tariffs each year on average by an amount equal to the consumer price index (CPI) minus 8 %. From 2004 onwards, ComReg does not allow Eircom to increase its regulated tariffs by more than the evolution of the CPI. In such circumstances, ComReg could not be considered to be approving tariffs contrary to the competition rules of the EC Treaty. One should also take into account that entrants will only invest in alternative access infrastructure if Eircom's retail price allows them a sufficient margin on the cost of rolling out such infrastructure.

Under the new EU regulatory framework for electronic communications, ComReg will in the coming months review, among others, the market for access to the public telephone network at a fixed location for residential customers in Ireland. In this context it will examine the market power of Eircom and assess the possible impact of the pricing strategy of the latter on competition, and, depending on the outcome, propose remedies. ComReg will, under Article 7 of Directive 2002/21/EC (2) notify its assessment and the envisaged remedies, if any, to the Commission, which will have the opportunity to give its comments.

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(1)  See recital 20 of Directive 96/19/EC of 13 March 1996 amending Directive 90/388/EEC with regard to the implementation of full competition in telecommunications markets, OJ L 74, 22.3.1996, p.13. Although this Directive has been repealed and replaced by Commission Directive 2002/77/EC of 16 September 2002, OJ L 249, 17.9.2002, the recital explains the Commission's approach to tariff rebalancing.

(2)  Directive 2002/21/EC of the Parliament and of the Council of 7 March 2002 on a common regulatory framework for electronic communications networks and services (Framework Directive), OJ L 108, 24.4.2002.

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