Do you agree that an obligation not to show undue preference to specific end users as described above (and in the Draft Decision Instrument in Appendix 3)

should be imposed on eircom? Are there other approaches that would address the identified competition problems? Please explain the reasons for your answer, clearly indicating the relevant paragraph numbers to which your comments refer, along with all relevant factual or other evidence supporting your position.

eircom does not believe that an obligation not to show undue preference to specific end-users of LLVA is required.There are a number of issues arising.

First, eircom does not agree that the obligation not to show undue preference to specific end-users means what ComReg suggests it means at para. 6.110. It appears, in particular, that ComReg understands an obligation not to show undue preference to specific end-users to be the same as the obligation of non- discrimination that it may impose at the wholesale level. However this is not correct and there are significant differences between the two. In accordance with the terms of Regulation 10 of the Access Regulations, an obligation of non-discrimination requires the SMP operator to treat his own downstream activity in the same way as he treats competing downstream operators; and to treat all competing operators in the same circumstances in the same way. Non-discrimination means no discrimination and it also means that dissimilar conditions may not be applied to equivalent transactions.

A requirement not to show undue preference to specific end-users is a radically different idea. To require that differences in treatment be objectively justified is in fact equivalent to ban showing preference to any specific end-user. The normal meaning of preference is “the act, fact, or principle of giving advantages to some over

others”119_{.The dictionary definition of undue suggests that it is something bad and is}

greater or more extreme than you might think appropriate. The words “specific end- users” also cannot be interpreted to include a requirement that all end-users within a category be treated the same. Therefore, preventing undue preference to specific end-users does not mean that there can be no preference shown to a specific customers, that is, no preferential or different treatment; just that any preference must be, not objectively justified, but simply no more extreme than might be

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appropriate.eircom believes, in this context, that to the extent that the incremental costs of delivering a product (including the price of the relevant wholesale input) is recovered in the price offered to a specific end-user, there can be no suggestion that the preference shown in the offering of tariffs that are different from tariffs offered to other customers is “undue”. This is consistent with the judgment of the Court of Justice of the European Union in the Post Danmark case.

Second, and in any event, eircom does not believe that an obligation not to show undue preference to specific end-users can be justified in the presence of eircom‟s USO. eircom‟s USO provides that eircom charges the same price for FVA in all cases, thereby providing entirely adequate protection to those “consumers which

continue to primarily value only the standalone FVA product” and there is no

justification for a further similar obligation under SMP regulation.Our comments in response to Q21 concerning the scope of application of regulatory controls at retail level being limited to the regulated product are also relevant in this context.

Without prejudice to eircom‟s position that this obligation cannot be properly justified and is unnecessary, were ComReg to unnecessarily duplicate the USO and require eircom not to show undue preference to specific end-users, then eircom believes that further clarity is required in terms of the process which ComReg proposes to use to ensure compliance with any such requirement. It is eircom‟s view in particular that an “assessment on a case by case basis”, short of specifying the specific test that would be used to assess compliance, if it is not to be arbitrary, can only take place on an ex post basis so that it can indeed be reasonably shown that the discount or rebate may have the effect of restricting or distorting competition.

Q.24 Do you agree with ComReg‘s draft Decision Instrument at Appendix 3? Do you agree with ComReg‘s Definitions and Interpretations as set out in the draft Decision Instrument? Please explain the reasons for your answer, clearly indicating the relevant paragraph numbers to which your comments refer. eircomagrees that no retail controls should apply to HLVA. We reject the remainder of the draft Decision.However, eircom accepts that all of the wholesale obligations should remain in force pending consideration of the call origination market.

In the event that ComReg were to impose SMP and remedies, we consider several element of the decision notice asflawed, redundant or unclear.

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Section 6 seems to be redundant, or at best a recital.

The new obligation at8.1 “Eircom shall not charge excessive prices” is poorly defined, as it is not clear what might be meant by the term “excessive”. This is not justified in the analysis that leads to the Decision Notice.

The new requirement in 8.2 to comply with Annex 1 of ComReg Decision 03/07 is unclear: does it require a new decision to make eircom comply with an existing decision?This seems to be identical to the requirement in 8.3 which is somewhat better worded

10.2 seems to require any individual service included in a bundle which contains LLVA must be available on a stand-alone basis, and purports to set tariffs for each element in any such bundle. The provisions of the decision notice can only apply services which clearly fall within the LLVA market.

10.3 is strangely worded: Is there a double jeopardy in requiring eircom to “avoid a margin squeeze” AND “comply with a net revenue test” . Is the net revenue test not just the means to demonstrate that a margin squeeze was avoided?

10.4 seems to maintain an obligation that has not yet been imposed.

Q.25 Do you agree with ComReg‘s preliminary conclusions on the Regulatory Impact Assessment? Please explain the reasons for your answer, clearly indicating the relevant paragraph numbers to which your comments refer, along with all relevant factual evidence supporting your position.

As we have explained in detail above, eircom fundamentally disagrees with the substance of the market analysis being carried out by ComReg here. Consequently, we cannot accept the Regulatory Impact Assessment (RIA) in principle. However, we also have significant specific issues with the purported RIA, which, in effect, means that the RIA is not fit for purpose.

We are disappointed by the approach adopted by ComReg, which is little more than a qualitative discussion. No attempt has been made to quantifiably assess the efficiency or cost of ComReg‟s proposals.

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In addition, the RIA is far too limited and does not consider all of the available options. We have earlier made it clear that as some recent developments become established, these will undoubtedly have significant impacts on the markets in scope in this review, and it is incumbent upon ComReg to take a prospective view when analysing the markets. Yet, ComReg does not consider these developments as part of its RIA.

Indeed, in Para. 7.56of the Consultation Document, ComReg makes the point that “regulatory forbearance is unwarranted”. However, this is based on the assumption that SMP has already been found to exist in particular markets, indicating clearly that ComReg is starting from the wrong premise when conducting this RIA.

In this context, when listing in Para. 7.58 the options it intends to consider, ComReg‟s RIA focuses exclusively on remedies and obligations, apparently treating the definition and analysis of the markets as effectively “faits accompli”. Alternative market definitions, such as the inclusion of calls and access in the same market, are simply ignored in the RIA.

As far as the actual analysis carried out by ComReg is concerned, many of the alternatives are reasonably well laid out and explained, although the analysis is quite repetitive and simplistic. In summary, the limitations outlined above mean that the overall RIA is seriously defective and cannot reasonably be considered to be fit for purpose.

Q.26 Do you believe that ComReg’s draft Decision Instrument set out above is, from a legal, technical and practical perspective, sufficiently detailed, clear and precise with regard to the matters proposed therein? Please explain the reasons for your answer, clearly indicating the relevant section numbers to which your comments refer, along with all relevant factual or other evidence supporting your position.

No. The decision instrument is not clear or precise. Please see our response to Q24 above.

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ANNEX 1