In the space of a week, ComReg issued five decisions (D06/14-D10/14) concerning universal service obligations (“USOs”), only for this to be followed by eircom appealing its re-designation as USO for access to telephone services in remote rural areas.

The decisions range from maintenance and management of the national directory database, to provision of public payphones and measures for disabled end-users. A brief overview of each decision is set out below:

  1. D06/14 – Management and Maintenance of the National Directory Database

Despite an expression of interest by British Telecommunications Ireland Ltd (“BT”), ComReg confirmed in Decision D06/14 (dated 1 July 2014), that eircom will continue to compile the National Directory Database (“NDD”) until 30 June 2015. 

The NDD is a record of all subscribers of publicly available telephone services in the State, who have not opted out of having their details recorded in it.  Its primary function is to create a source to facilitate the compilation of telephone directories and directory enquiry services.  It also serves as the basis for the “opt-out” register for direct marketing purposes under the European Communities (Electronic Communications Networks and Services)(Data Protection and Privacy) Regulation 2011.  The NDD currently lists around two million subscribers, of which over one million have “opted out” for direct marketing purposes.

eircom is currently obliged by law to manage the NDD pursuant to Regulation 19(4) of the Universal Service Regulations.
Following a consultation issued in May 2014, ComReg confirmed its view that there is an on going need for the maintenance and management of the NDD in order to avoid legal and commercial uncertainty, and to protect the rights of consumers. 

In response to that consultation, BT expressed an interest in taking over the provision of the NDD, however ComReg felt that BT’s submission “lacked the necessary detail that ComReg would need to evaluate BT’s interest”.  Given that the direction on eircom will only last until 30 June 2015, BT will have an opportunity to have another go and deliver a more detailed submission next time round.

  1. D07/14 - Provision of Directory of Subscribers, Universal Services Scope and Designation

ComReg issued a further decision on 7 July 2014 that eircom should continue to provide printed directories to consumers in the State for a further four years.  eircom must provide the directories on an ‘opt-out’ basis for a period of two years;  after that, eircom should provide the directories on an ‘opt-in’ basis (if it deems this cost-effective) for a further two years.  Should eircom consider that the opt-in model is not cost effective, then the opt-out model will continue for the final two years of the four year period.

Regulation 4 of the Universal Service Regulations provides that the designated universal service provider (currently eircom) must provide a comprehensive directory of subscribers in an approved form - printed or electronic or both and updated at least once a year - or a comprehensive directory enquiry service.  

A number of alternatives to a printed directory have become widely available over the last few years, including directory enquiry (“DQ”) services and online searches.  However, ComReg noted that DQ services can be expensive, and not all end-users have access to online searches (18% of Irish consumers do not have internet access).  As such it considers that printed directories continue to provide a basic service to many people throughout the State as the only affordable way to access phone numbers.  In ComReg’s view complete withdrawal of such a service may lead to consumer detriment.

eircom however expressed the view that the primary format for the directory should be electronic,  given that a number of DQ operators provide online directories without a requirement to do so. It seems eircom’s views fell on deaf ears with ComReg maintaining its position that it would not be appropriate to impose an obligation to provide an online directory at this time. 

ComReg also noted that any switch to an opt-in service would need to be supported by a public awareness campaign in order to ensure those who wish to retain the printed directory could do so, and ComReg reserved its right to approve any campaign approach.  

  1. D08/14 – Provision of Public Payphones, Universal Service Scope and Designation

Bad news for eircom as despite the declining usage of public payphones across the State, ComReg concluded in Decision D08/14 that imposition of the USO should remain even in urban areas where mobile phone usage is high.  More bad news for eircom followed with ComReg deciding that given eircom’s expertise – and perhaps more importantly the fact that no other operators came forward to be the Universal Service Provider (“USP”) - eircom should be re-designated as the USP for provision of public payphones for the coming period.  In a further twist, ComReg then increased the period of USP designation from two years to four years, effective from 7 July 2014 until 30 June 2018.

In an attempt however to offer some concessions to eircom, ComReg adopted a number of changes to the previous Removal Policy, now aimed at making it easier and quicker for eircom to withdraw payphones which are no longer economic.  In particular, ComReg has moved away from a consumer representation based test towards a usage level test.  At first sight this seems to strike a good balance but as is so often the case, the devil is in the detail.  In summary, in order to remove a payphone, eircom must demonstrate, inter alia, that:

  • Average usage for the previous six months was less than one minute per day; and
  • Average minutes for the previous six months to Freephone numbers and Emergency Services combined was not more than 30 seconds of these minutes.

In areas where there is more than one public payphone within a 100 metre radius or within its line of sight (eg, either side of a road or on adjacent roads), the average use across all of the phones combined must be assessed.  

According to ComReg’s calculations the one minute per day usage threshold will enable eircom to remove 37% of existing payphones (should it wish to do so) – a claim which is disputed by eircom, not least given the second condition which relates to Freephone and Emergency call usage.  

So what was eircom’s response to the new usage levels set? 

eircom expressed concerns “regarding the proposed arbitrary usage threshold which is set at 1/10th of the level of usage that would be expected from a single household, while also placing undue emphasis on freephone usage as a determinant for the retention of payphones”.  As regards ComReg’s apparent reliance on freephone / emergency services usage as a criterion, eircom pointed out that the reason for using a payphone to make 1800 Freephone calls is partly attributable to the fact that mobile costs for making these calls are still relatively high - as opposed to some intrinsic need for payphones in a particular locality.    

Although ComReg has agreed to review the usage level criteria after two years, this may be little consolation to eircom in the meantime.  So too is ComReg’s acknowledgment that eircom can always apply to the Universal Service Fund to seek funding to meet the net cost of the USO.

Finally, as a matter of housekeeping ComReg took the opportunity to clarify a point raised by a number of respondents on the ability of ComReg to require removal of payphones.  In this respect ComReg noted that while it can mandate the USP to provide payphones and set the conditions for their provision, ComReg cannot mandate the removal of any payphones but that removal is “a commercial decision for the payphone provider in which ComReg has no role”.  Taking into account however the usage levels set by ComReg (eg, less than one minute per day use in the last six months) , it would seem that removal of payphones is not an entirely commercial decision just for eircom – in setting such low usage levels, it would seem that ComReg still retains some influence over eircom’s ‘commercial’ decision to remove payphones.     

  1. D09/14 – Universal Service Obligation – Measures for Disabled End-Users

Despite overall progress for disabled customers in accessing telephone services, this Decision re-appoints eircom as the universal service provider (“USP”) for specific measures for disabled end-users until 30 June 2015. 

Representatives within the ComReg established Forum on Electronic Services for People with Disabilities (the “Forum”) raised the following as on going key priorities / measures for disabled users: availability of a Text Relay Service, suitability of Terminal Equipment, and Website Accessibility. 

eircom had sought to avoid re-appointment by noting, inter alia, that ComReg recently extended application of many of the specific measures to assist disabled customers in accessing telephone services to the other telco operators also.  However, the extension of these measures to other operators will only take effect at the end of November 2014 and as the current USP designation period expired on 30 June, there would have been a gap in services for disabled customers without eircom’s re-appointment.  In addition, the other telco operators are only required to meet some – but not all – of the measures which apply to eircom under the USP designation.  

Those measures which have been extended to other operators are the requirement to provide:

  • an accessible complaints procedure;
  • an accessible top-up facility for pre-paid mobile telephone end-users so that disabled users do not have to follow voice-prompts or be dependent on a third person to enable them to top-up;
  • an accessible directory enquiries service;
  • accessible billing formats;
  • an accessible facility to test compatability of terminal equipment or where this is not available, an appropriate returns policy as an alternative;
  • accessible information on the measures available eg, by means of ‘one click’ access from the operator’s homepage to the disability section of the website;
  • a facility for disabled subscribers to register requirements - including preferred means of communication and any bundle preferences eg broadband or text only.

However, in an attempt to strike some balance, ComReg has indicated that eircom will only be required to meet the above measures as part of its USO until the end of November, when other telco operators will legally be required to offer these measures also.  After this time, eircom will still need to offer these services but not as part of its USO.  For other measures not covered by the above list, eircom’s USO will continue until end of June next year.  Accordingly, eircom will have to ensure the following: availability of a Text Relay Service; a rebate scheme to cover additional costs needed to make a text call; provision of certain terminal equipment such as push button telephones, inductive couplers and amplifier phones, restricted vision phones etc.  

ComReg has also noted in its decision that it will be issuing further consultations in this area. This includes consultation on the introduction of a Next Generation Text Relay Service, already being provided in the UK by British Telecommunications plc (“BT”).   

  1. D10/14 – The provision of telephony services under the Universal Service Obligation – Access at a Fixed Location

Despite protestations about the scope of the USO, ComReg has re-designated eircom as the USP for access at a fixed location (“AFL”) for a further 18 months, from 7 July 2014 until 31 December 2015.  This new designation is on broadly similar terms to eircom’s previous designation which expired on 30 June 2014. 

The AFL covers voice, fax and data services capable of enabling customers to have ‘functional internet access’.  It would seem that eircom has become a victim of its own success, with ComReg considering that “in short, there is no other undertaking at this time that could provide the AFL USO in accordance with regulation 7 of the [Universal Service Regulations 2011] [sic]”.  

ComReg’s decision means that eircom will continue to have to:

  • meet reasonable requests for access at a fixed location for voice, fax and so-called ‘functional internet access’ (“FIA”).  FIA requires that at least 94% of customers can access the internet at data speeds of no less than 28 kbps – given the increased take-up of apps and over-the-top services and data hungry consumers, 28 kbps would hardly seem ‘functional’; 
  • meet connection costs of up to €7,000 (referred to as the Reasonable Access Threshold);
  • provide geographically averaged pricing to balance out the costs for consumers in rural areas versus those in urban areas;
  • comply with existing Quality of Service (“QoS”) targets;
  • ensure certain affordability and control of expenditure measures ie, selective call barring for outgoing calls to national, mobile, international and premium rate services; phased payment of connection fees; guidance on its disconnection policy for non-payment of bills.  Itemised billing has been removed from the USO, as the requirement to provide itemised billing was extended by ComReg on 2013 to all operators in the Irish telecoms market.   

Whether or not eircom will continue to be the USP after December 2015 is subject to further consultation.  There is currently on going consultation on certain aspects of the USO as ComReg split the timeline for responses to its consultation on the provision of telephony services under the USO – Access at a Fixed Location (ComReg 14/48) into 2 parts.  The above decision relates to Part 1 of the consultation, with responses to Part 2 due by 8 August 2014.  The on going consultation and a possible additional consultation on back of this decision are intended to allow for other operators to express interest in providing the USO as well as allowing for a more detailed review of the scope of the current USO and any necessary transition arrangements in the event that another operator comes forward to provide the USO.  Given however that UPC Communications Ireland Ltd (“UPC”) disagreed with the need for the USO to continue for a further three to five years, it appeared to rule itself out at an early stage.  Interest could still have come from BT Communications Ireland Ltd (“BT”)  or Telefónica O2 Ireland Ltd (“O2”) who both supported the continuation of the USO, but this seemed unlikely.  And on 19 August ComReg confirmed that no expressions of interest had in fact been received.  Even if another operator had expressed interest, ComReg might well have remained of the view, given eircom’s ‘high degree of control and ownership of the public switched telephone network (PSTN)’ and physical reach across the country, eircom remains best placed to deliver the USO.     

ComReg indicated in its response to consultation and decision that despite developments in technology (eg, increase in smartphones, and use of over-the-top (“OTT”) services) and consumer purchase patterns (including the steady increase in customers buying bundles) it still believes that a USO is necessary for at least three to five years.  Perhaps more worrying for eircom are ComReg’s statements that it may in fact be necessary to impose additional obligations such as cost evaluation studies (with detailed costs breakdown) concerning use of alternative technologies to meet the USO and meet QoS levels, and additional QoS targets in respect of service availability, call quality and the national and annual nature of the targets.  

Additionally, ComReg’s on going / wider consultation could still see changes to the existing scope of the USO as regards possible increase in the level of RAT eircom / the USP has to meet, whether or not geographically averaged pricing continues to be necessary, and the types of affordability measures to be offered to vulnerable customers.  As regards the latter, ComReg has stated that it is open to considering the merits of eircom’s proposals such as a retail price cap but with room to allow prices to be lowered in certain areas such as the Large Exchange Areas, and an industry affordability fund to subsidise vulnerable users.  Although a specific fund seems like a good idea in principle, it is unclear to what extent this would differ from the existing USO Fund and whether it would be any easier for eircom to access monies under any new type of fund; experience to date has shown that it has not always been easy for eircom to access the USO Fund, but with the existence of the Fund often cited as a reason why continued imposition of obligations on eircom is ‘proportionate’! 

On a more positive note, ComReg disagreed in its response to consultation and decision with suggestions that the USO should be extended to cover broadband services.  Those familiar with the Irish market will be aware that there are a number of current and future initiatives on the table to enable the roll-out of high speed broadband to customers in rural areas – such as the National Broadband Scheme, Rural Broadband Scheme and the Government’s National Broadband Plan for 2014-2016 of which fibre roll-out will be a cornerstone, as well as market developments such as the on-going commercial roll-out of high speed broadband and 4G services by operators.  

eircom fights back and appeal’s AFL – USO decision 

It seems that eircom is not willing to take the matter lying down, and on 1 August, eircom lodged papers before the High Court appealing ComReg’s decision to re-designate it as the USP for AFL.  We have not seen details of the papers, but understand from press reports that eircom is unhappy with ComReg’s justification for the continued imposition of the USO in absence of a strategic review. There is some sympathy for eircom’s view, particularly as the decision to re-appoint eircom as the USO for AFL services has been taken without the consultation having fully completed, with Part 2 responses only submitted at the start of August (almost a month after ComReg’s USO decision).  

On 6 August, ComReg issued an information notice indicating that “ComReg will fully defend the proceedings brought by eircom”. It would seem that the battle lines are well and truly drawn.