Competition converges on Eircom's core market

08-10-2009

by Ralph Averbuch

Anyone can be Eircom's competitor in an IP world, and more are putting it into practice.

If there's one buzz-word that's stuck with us over the last 10 years, it's been 'convergence'. It's the argument that the move to a digital economy would remove barriers to competition between all sorts of companies which were hitherto protected from each other by the expense of getting into another's marketplace. Not so now. The roll-out of high speed broadband links into offices and homes has allowed the emergence of small, fast-moving telecoms upstarts like Blueface with, compared to traditional telcos like Eircom, absolutely tiny overheads. Equally it's become clear that all sorts of big organisations now see themselves fighting head-to-head for customers where it would have been inconceivable only a few years ago. Who, four years ago, would have seen a search engine and a computer manufacturer competing to win market share in the mobile smartphone market? In Ireland this is now epitomised in the very open statements of intent by Vodafone which wants to take on Eircom's core landline business. That's because, as Vodafone (and all its competitors) have chased the concept of creating enhanced customer value, it has decided that it needs to offer a bundle of services in order to capture more of people's disposable income. Selling a mobile package or landline deal on its own offers little opportunity to add value. However, if you can offer broadband, landline, mobile and, in the case of the cable and satellite companies TV, you can offer compelling savings over individual services, as well as grabbing a larger slice of that customer's monthly spend. Once locked in to a bundle, it's also just a whole lot more inconvenient for a customer to change providers compared to just one service. So now we have Eircom on the receiving end of this long-running wave of convergence that's affected so many markets. It faces attacks from a wide array of new competitors which want to move in on its turf. That's why today it's mobile company Vodafone which claims to be the second biggest landline operator in Ireland. This makes for interesting times for Eircom which needs to find ways to enhance its own offerings to customers in order to prevent simply becoming a back-end infrastructure player for all the other triple-play (or more) companies. Simply being the back-haul boy for everyone else is not where the opportunities to generate good returns are found...

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