Weekly Digest
Weekly Digest Issue No. 465
14-05-2009
by Deirdre McArdle
ComReg poised to cut LLU prices? | Intel stung with EUR1 billion fine
Eircom kicks into cost-cutting action
As it seeks to rein in its costs and service a debt just shy of EUR4 billion, Eircom has announced "stage one" of a major restructuring programme. The telecoms firm is to cut 1,200 jobs by mid-2011 and request voluntary pay cuts of between 5 percent and 10 percent. In a statement, Eircom said the job cuts will affect both contract and full-time employees. Eircom employs around 5,000 full-time staff and 2,000 contract workers. The programme will also see performance-related bonuses eliminated until mid-2011, and subsistence and mileage expenses, as well as other payments, will be cut by a quarter. The cuts are aimed at saving Eircom around EUR130 million per year by 2010/2011. This estimate includes additional unspecified "initiatives" currently underway at the firm. "Today's announcement is an important first step. Management recognises the very significant impact of the current economic environment and is committed to securing far reaching cost reductions, and an overall vision and strategy framework for the business," said Cathal Magee, Acting CEO of Eircom. Some form of cost-cutting was expected following the telecoms firm's figures for the second half of 2008, which revealed a pension deficit of EUR433 million. The restructuring has been agreed with Eircom unions, and employees have been briefed. The deal comes during a period of unsettlement at Eircom, with its parent company Eircom Holdings (formerly BCM) the subject of a bid from Australian firm TaemasBridge, which is being led by former Babcock & Brown executive Rob Topfer.
ComReg poised to cut LLU prices?
In a bid to boost competition in the telecoms market, ComReg has launched a consultation on proposals to cut the price of the key local loop unbundling (LLU) product by over 25 percent, from EUR16.43 to EUR12.18. LLU is the process which enables authorised operators to make use of the physical copper connections between a customer's residence or premises and the local exchange. It is usually used to provide broadband services. While BT chief Chris Clark welcomed the proposal, saying it would "really help", Magnet boss Mark Kellet wasn't so enamoured. "We are deeply disappointed by the reduction being proposed by ComReg today. While a reduction is welcome it still does not go far enough. As an example, if we look at Northern Ireland, even with today's proposed reduction, it is still 33 percent cheaper to access the local loop there." LLU pricing has been an ongoing issue for many years. Last August ComReg "set aside" a decision on Eircom's line share pricing -- the price it charges other operators to rent part of the local loop -- just a couple of months after directing Eircom to cut the price from EUR8.41 to EUR2.94. According to the regulator, the purpose of the current consultation is to get the views of all interested parties before it makes a decision. It will be interesting to see what the conclusion will be.
Intel stung with EUR1 billion fine
Chip giant Intel got a kick in the teeth on Wednesday with the news that the European Commission is to fine it EUR1.06 billion for abusing its dominant position using "illegal anticompetitive practices" to exclude its main rival AMD from the market. The levy is the most any company has been fined by European antitrust regulators. Along with the fine, the Commission has directed Intel to "cease the illegal practices immediately". The Commission found that Intel engaged in two forms of illegal practice. Firstly, it found that Intel gave rebates to computer manufacturers on the condition that they bought all, or the majority of, their x86 CPUs from Intel. It also found that Intel made direct payments to a major retailer, MediaMarkt, on the condition that it stocked only computers with Intel x86 CPUs. "Intel has harmed millions of European consumers by deliberately acting to keep competitors out of the market for computer chips for many years. Such a serious and sustained violation of the EU's antitrust rules cannot be tolerated," said European Competition Commissioner Neelie Kroes. For its part, Intel said it will appeal the decision. "Intel takes strong exception to this decision. We believe the decision is wrong and ignores the reality of a highly competitive microprocessor marketplace… There has been absolutely zero harm to consumers. Intel will appeal," said company chief executive Paul Otellini.
Google beats search drum
Just days before the launch of a new type of search engine -- Wolfram Alpha -- Google has released a slew of new search products. The new offerings include Google Search Options, Google Squared and Rich Snippets. Google Search Options enables you to fine-tune your search by different types of results -- videos, forums, and reviews (including blogs) -- and by time -- recent, past 24 hours, past week and past year. You can also see related searches, a timeline view or a "wonder wheel" view, which is like a visualisation of your results. Meanwhile, Google Squared, a Labs project set to debut later this month, lets you add or delete results to produce the most useful "square" of information that you can save to your Google account and refer back to later. Finally, Rich Snippets provides more useful information in the blurbs that sit below the URL on the search results page - so, for example, if you're searching for a hotel it could produce a recent review of the premises. It's probably no coincidence that Google rolled out these products right now: even though Wolfram Alpha's creator Stephen Wolfram has said his search engine has not been designed to compete with Google, the search giant no doubt is keen to affirm its market dominance. Wolfram Alpha is likely to be primarily targeted at researchers and students; it's a computational search engine that searches its own knowledge database, which comprises millions of pieces of information, to provide specific answers to complex questions. Wolfram Alpha is currently being made available to "a few select individuals".
Software piracy still on the rise
Software piracy rates remained unchanged in Ireland during 2008 at 34 percent, according to the Business Software Alliance's (BSA) sixth annual global report. The rate in Ireland has been consistently declining since 2003, when it stood at 41 percent. On the flip side however, losses due to software piracy increased last year to EUR84 million. This is a far cry from the losses seen by other European countries such as Italy with USD1.9 billion, the UK with USD2.2 billion, and France with USD2.8 billion. Top of the global list, with industry losses of USD9.1 billion, is the US, closely followed by China with USD6.7 billion. According to the report, Georgia had the dubious honour of being the country with the highest piracy rate, a staggering 95 percent, with Bangladesh, Armenia and Zimbabwe tied in second place with a 92 percent rate. Overall, the report revealed that while more nations saw their piracy rates drop during 2008 -- 57 of the 110 countries surveyed -- worldwide software piracy rates rose for the second year in a row, from 38 percent to 41 percent, largely because PC shipments grew fastest in high-piracy countries such as China (80 percent) and India (68 percent).
Caped Koala Studios has built a virtual world for kids, combining education and social networking 