Ireland: Managed VoIP – Making Waves In The Fixed Voice Access Market

A year on from ComReg's October 2012 Market Review of the fixed voice access ("FVA") market, ComReg has followed up with a Supplementary Consultation (ComReg 13/95). Both of these initiatives follow on from ComReg's 2007 market analysis which identified two markets for FVA services:

(i) Lower Level Voice Access or 'LLVA' (PSTN and ISDN Basic Rate Access ie, traditional telephony networks); and

(ii) Higher Level Voice Access or 'HLVA' (Business ISDN Primary Rate Access and Fractional Rate Access).  Eircom has significant market power (SMP) in both markets and is subject to wholesale and retail obligations.

In its October 2012 Market Review however, ComReg proposed to broaden the LLVA market to include fixed voice access via 'Managed VoIP' over a broadband connection, as ComReg considered this to be functionally similar to the traditional PSTN / ISDN voice service. 

ComReg defines 'Managed' VoIP as meaning that the supplier also provides and maintains the customer's access path (either directly on its own network or indirectly by renting the access path from a third party) – therefore the supplier can manage the broadband network in such a way to prioritise quality of service requirements for the voice service.  There are a number of Managed VoIP providers in Ireland, including UPC, Digiweb and Imagine.   This can be contrasted with 'Unmanaged' or 'Over the Top' (OTT) VoIP, where the supplier has very limited control over the quality of the service experienced by the user eg, Skype or Viber.  ComReg does not currently consider OTT VoIP to be a suitable substitute in the LLVA market, and there are no signs of this changing in the near future.

Despite widening the LLVA market to include Managed VoIP, ComReg's preliminary view in October 2012 was that Eircom still had SMP in both the LLVA and HLVA markets.  ComReg proposed wholesale and retail obligations on Eircom in the LLVA market.

However, as the proportion of direct access offered by players other than Eircom in the HLVA market had increased since its last review in 2007, ComReg considered that wholesale obligations alone would be sufficient to address the competition problems identified in the HLVA market. This will be welcome news to Eircom who is no longer subject to retail price caps and related obligations in this market (eg, not to unreasonably bundle products).  Whether customers will feel the same, remains to be seen. 

ComReg's Supplementary Consultation takes the existing debates on market definition further, including in particular ComReg's treatment of 'bundled services' in the 2012 Market Review.  Bundled Services correspond to Market 1 in the European Commission's Recommendation 2007/879/EC on relevant product and services markets within the electronic communications sector susceptible to ex ante regulation. 

A number of market players made submissions to ComReg on treatment of bundled services following the 2012 Market Review; Eircom in particular had submitted that the natural starting point for defining markets should be bundles of services rather than the specific elements of those services. ComReg should therefore have defined the retail FVA market on the basis of separate product bundles comprising 'Voice Only' and 'Bundled Voice'.

ComReg has so far maintained its current approach.  However, given that the 2007 Recommendation is itself undergoing review, and indications are Market 1 might well be removed, a sea change in ComReg's approach could be on the horizon.

In addition to market definition issues, the Supplementary Consultation addresses the thorny issue of remedies. Although still very much at an exploratory stage, ComReg has floated possible amendments to the current remedies in the FVA market and whether these might lead to removal of some of the remedies in the retail market.

However, it's not all plain sailing for Eircom, with ComReg floating the introduction of margin squeeze tests in the wholesale markets for (i) fixed voice call origination ("FVCO"); and (ii) wholesale broadband access ("WBA").  If effectively implemented upstream, ComReg has suggested these remedies might permit the downstream removal of the current net revenue test ("NRT") in the retail FVA market.  ComReg's approach is therefore very much focused on better regulation through addressing concerns at the wholesale level, and taking a less interventionist approach at the retail level.  This assumes however that regulation at the wholesale level is effective. 

The original deadline for responses to the Supplementary Consultation of 27 November 2013, was subsequently extended to 18 December 2013.

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