Rural broadband users face price hike over claims of 'urban subsidy'
Published 15/07/2014 | 02:30
BASIC broadband prices affecting over one million people in rural Ireland could rise under new rules being considered by Ireland's telecoms regulator.
The Commission for Communications Regulation (Comreg) has found that urban broadband customers are subsidising rural users.
This opens the door for Eircom to apply to the regulator to raise its rural broadband prices to recover costs associated with providing services outside of the main cities. The move, which Comreg says complies with European law, would affect all operators seeking to resell broadband services on Eircom landlines.
The price of such broadband services is strictly regulated by Comreg. However, the watchdog has ruled that rural internet users are not paying the full cost of broadband provision in parts of the country with around 600,000 homes and businesses.
"Eircom appears to be . . . under-recovering its costs," said the Comreg ruling. "There is a cross subsidy from (urban areas) into areas outside. If there were evidence of such an under-recovery, Eircom may be allowed to charge correspondingly higher prices outside (urban areas) subject to the proposed notification and approval procedures."
However, the regulator conceded that Eircom had little competition in rural areas when it came to broadband infrastructure.
"There are very few or no alternative infrastructure broadband providers outside (urban areas)," it said.
The prospect of a regulatory green light for more expensive rural broadband is likely to concern rural broadband activists, who have recently been buoyed by a new government National Broadband Plan promising fibre broadband connections to over 1,000 rural towns and villages.
But with such a national plan at least two years off, rural internet users now face the prospect of higher monthly bills for basic broadband speeds of under five megabits per second (Mbs).
Asked about the fear of a new 'digital divide' emerging in Ireland, a spokesman for Comreg declined to comment.
A spokesman for Eircom said that the operator was considering the regulator's ruling and that it had no plans to immediately increase rural broadband charges as envisaged by the regulator.
The spokesman said that Eircom had committed to rolling out faster broadband services to 1.4 million homes and businesses by the middle of 2016.
Rival operators have also warned that a hike in Eircom's rural broadband infrastructure pricing could damage their incentives to invest in marketing broadband in the areas affected.
"The new price control provides the imprimatur for price increases in semi-rural and rural locations," said a spokesman for the Alternative Operators in the Communications Market (ALTO), a body that includes companies such as Sky and Vodafone.
"To minimise the potential hardship for the semi-rural and rural communities . . . copper access costs should be borne by (Eircom)."