February 2, 2007 at 12:05PM What should be done with eircom (and why ESB’s privatisation will fail)
Ever since eircom was privatised, I’ve had a bee in my bonnet about the way it was done.
To quote Mary Harney (and no, I’m not a PD), there’s only one thing worse than a public monopoly and that’s a private one. The single worst thing you can do in privatising a public company like eircom was is to privatise it wholesale.
When eircom was privatised, I was surprised that it wasn’t split into two companies, one to own and manage the network and another to handle the regular business of a telco.
For this arrangement to work properly, the network management company which would both manage and own the network would need to be a public company, a non-profit, or both, and the way it covered its expenses would need to be structured in such a way as to create a wider telecoms market. One method that I like is that any company would be allowed ongoing access to the network so long as it paid its dues to the network management company by (a) taking up network maintenance contracts in exchange for access, (b) taking up network expansion contracts in exchange for access, or (c) paying cold hard cash.
A regulator is not enough; a (proper) regulator is just a stick. You need a carrot too to encourage the market participants to play fair and to make it easy for new players to join.
The single best thing that could be done for the Irish telecoms market is for eircom to be split up upon such lines. Without doing so, the country’s progress will remain retarded by a powerful incumbent with no interest in giving up its dominant position.
Right now, the ESB, Ireland’s main electricity supplier, is being primed for privatisation. I don’t see it leading to a functioning market though: while EirGrid will manage the network, the ESB will still own the physical assets, creating yet another private monopoly.
Aside: I mentioned this on Irish Election back in October.
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