The Irish regulatory authority ComReg has today published two documents, setting out new proposed wholesale charges for the use of unbundled local loops (ULL) of the fixed incumbent operator, eircom, and presenting the results of a recent consultation on the cost-accounting methodology.

Monthly rental charges are proposed to be set, initially (as of 1 Dec 2004), at €14,65 per month, with annual adjustments for inflation every year up to and including 1 Dec 2007.

ComReg had previously determined (in May 2003, when the eircom charge was €16,81 per month) that the wholesale charge for ULL should be based “on the cost of an efficient operator” and that it should be reduced to €14,67 per month.

However, this principle, and the resulting new wholesale charge level, were challenged by eircom before the Irish High Court.

In the meantime, ComReg and eircom have settled the matter out of court, and one of the terms of the settlement was that ComReg would initiate a new process for the purpose of determining wholesale ULL charges.

The prevailing charge (€16,81) was left in place, awaiting the determination of a new charge. ComReg initiated a new process for setting the ULL charges, and the matter was, amongst others, addressed by means of two consultations concerning methodological issues, and specifically the use of a Forward-Looking Long Run Incremental Cost (FL-LRIC) methodology. One of the major questions put to consultation was whether eircom’s “real costs” should be used or rather “the cost of an efficient operator”.

ComReg has now concluded that charges should be based on “a modern, efficient network valued at today’s prices”.

ComReg has also recently published its conclusions from the market review regarding wholesale unbundled access to local loops (T-REGS news item of 19 April 2004), and the European Commission’s eCCTF has published its comments (T-REGS news item of 27 May 2004), which notably address the cost-accounting methodology.

eircom was found to have Significant Market Power (SMP) on this market, and obligations were imposed on eircom, including an obligation of cost-orientation. Having concluded on the basis of the costs, and having imposed the obligation of cost-orientation, ComReg now proposes a monthly rental charge of €14,65 for an Unbundled Local Metallic Path (ULMP).

The deadline for comments on ComReg’s draft direction is 28 Sep 2004.

ComReg’s Draft Direction can be accessed by clicking here.

ComReg’s conclusions from the consultation can be accessed by clicking here.