Bringing It

Interesting times at the Irish Times, as one of its columnists admits to lying to a tribunal, or, as she describes it, putting it into context, ‘denying it when first asked about it’. Before we judge too harshly, let us remember that the cock crowed thrice for St. Peter, and look what he went on to achieve.

Let me ignore most of the article to zoom in on one of the ostensibly truthier parts, and we note in passing that a theme of commentary from people working for institutions owned or part owned by O’Brien in the last couple of days has been the role of faceless civil servants, who, they suggest, may be the real villains here.

At the time Esat Telecom was trying to bring competition into the fixed line market. It had the backing of the European Commission but no support whatsoever from the civil servants at the department, who were busy protecting Telecom Éireann’s patch.

This account of events presents Esat Telecom as agents of progress and freedom, teaming up with the enlightened cosmopolitan callacticians in Brussels against the recalcitrant and insular monopolists of the permanent government. Now if I was going to write a maxima mea culpa, this is not really the line I would take, but that is by the by.

What I want to focus on here is the precise intention attributed to Esat Telecom: it was ‘trying to bring competition into the fixed line market’. As though -saints of this parish- there was nothing in it for them!

There is a rather excellent, condensed account of telecommunications liberalisation in Digicel (St Lucia) Ltd & Ors v Cable & Wireless Plc & Ors [2010] EWHC 774 (Ch) (15 April 2010), which, lord help me, I read last night.

The last decade of the 20th century saw vast changes in the global telecommunications industry. Across the world, numerous state-owned telecommunications operators were privatised. A wave of pro-competitive and deregulatory telecommunications policies swept the globe. Competition was perceived to be beneficial as a spur to technological innovation, as leading to reduced prices and leading to growth in the economies of countries with advanced telecommunications. The process of opening up the market to competition was called “liberalisation”.

Liberalisation led to certain identified consequences. In liberalised markets, the penetration of mobile telephony grew very quickly. As predicted, this led to a growth in the economy of the relevant country. New entrants into the market benefitted significantly. Incumbents also benefitted. First, an incumbent with a fixed network sold its services to the new entrant into the mobile market. Secondly, an incumbent with a mobile network benefitted from the expansion of the entire mobile market.

So we can see quite clearly that opening up the market to competition meant new entrants would benefit significantly. And thus there was every reason for Esat to ‘bring competition into the fixed line market’ – because they would make a killing by owning a share of the market.

This is no doubt painfully obvious to all of you and I am sorry to labour the point. However, there is a certain take-home lesson from Carey’s presentation of Esat’s activities as social altruism: whenever you read someone in the papers (say, the Irish Independent) or hear someone on the radio (say, Newstalk or Today FM) proclaim that such and such a market needs to be opened up for competition or such and such a public asset needs to be sold off, make sure you know what those words mean. They mean: we want a piece of the action.


7 Responses to “Bringing It”

  1. 1 Pope Epopt March 24, 2011 at 11:32 am

    And what is more, these ‘opened up’ markets always seem to develop a consensus cartel pricing structure and service quality within which to ‘compete’. Mobile communication is prime example.

    Funny that.

    • 2 Hugh Green March 24, 2011 at 11:51 am

      From Peter Hallward’s Haiti 2010, Exploiting Disaster:

      State owned factories of two essential products, flour and cement, were privatised in 1997, during Préval’s first administration. A year into his second administration, Préval announced the privatisation of Haiti’s most valuable state-owned asset, the national telephone company (Téléco), and by mid 2007 almost half of the workforce, some 2,800 employees, had already been laid off.Téléco has been one of the few reliable sources of public revenue and employment in neo-liberal Haiti, and Téléco workers protested the privatisation process from start to finish. To no avail; four months after the earthquake, in early May 2010, the government finally sold a majority stake to a subsidiary of the Vietnamese army, for a mere $59 million. (Over these same years, the Irish company Digicel rapidly expanded to take a commanding position in Haiti’s substantial and lucrative mobile phone market, and by 2008 it was already generating revenues of more than $250 million)

      I did a comparison between Digicel call prices in Haiti and O2 prices in Ireland in terms of the minimum wage (which Digicel has fought to keep low in Haiti) in both countries. Can’t recall how many multiples more expensive the Digicel tariffs were. I must check it again. The other point about Haiti is that mobile phones are considered particularly important on account of the non-existent infrastructure and poor physical communications. So the thing here is that the de-development wrought on Haiti by successive neo-liberal ‘adjustments’, and military dictatorship provides the, how might you put it, anti-infrastructure for mobile telephony products and the basis for O’Brien’s Corporate Social Responsibility rodomontades.

    • 3 Eoin O'Mahony March 24, 2011 at 12:31 pm

      And hey, who doesn’t like to be opened up?

  2. 5 Donagh March 24, 2011 at 11:51 am

    Sorry to barge in again, but….

    AMY GOODMAN: We’re talking to Kim Ives of Haiti Liberté who also just put out another issue of Haiti Liberté here in the aftermath of the earthquake. You talked about the cement company, the flour company, privatization. You know, one of the most painful problems now, especially for the Haitian diaspora, and for people who have, overall, loved ones here in Haiti, is that they haven’t been able to find out if they’re alive. They haven’t been able to communicate with them.

    KIM IVES: Right.

    AMY GOODMAN: And this goes to the telephone company.

    KIM IVES: Exactly. Teleco was the crown jewel of the Haitian state industries. During the first coup d’état, from ’91 to ’94, it was in fact the revenues from Teleco that sustained the government-in-exile of President Aristide. And now we see today, one week before this earthquake, the telephone company Teleco was privatized. It was sold to a Vietnamese company, Viettel. And if we had in this country a robust, agile, nimble national telephone company, a lot of the problems of communication could have been avoided. Instead, all the communications today are practically in the hands of the three private cell companies, Digicel, Voila and Haitel.

    AMY GOODMAN: But those—some people might say, well, if it was just sold a week before, then the fact that it was weak was due to the previous owner.

    KIM IVES: No, it was—that’s precisely the case. It was the Haitian government who was, in fact, with the leadership of René Préval and his prime ministers, who were undermining and sabotaging. We spoke over the years. I remember, thirteen years ago, we were doing a delegation here to talk to the unionists. That’s how long this struggle against privatization has been going. We were speaking to the unionist at the telephone company, at Teleco, a certain Jean Mabou. And Jean Mabou, the union leader, took us to a room where it was filled with new, brand new, modern telecommunications equipments, boards, all sorts of things. He said, “We’ve got these, and they won’t allow us to install them. They are deliberately undermining the state company so they can sell it.” And this is the irony, is that you have the fox guarding the chicken coop. And the people are, in that way, undermined in their ownership of their own state companies.

    O’Brien has been saying since the report was published that the way they did the Esat deal was exactly the same as they did all those other deals afterwards, with the same people.

    Now we know that he won the original licence unfairly. And so, we can see the model of how the other companies managed to muscle into ‘expanding markets’, in some cases where there was an ongoing campaign amoung the elites to privatize the phone network which would benefit those who got in early, and when they were not they had other ways of influencing the liberalisation of the market.

    You’ve seen this I know, but

    • 6 Hugh Green March 24, 2011 at 3:00 pm

      You familiar with the story he had put together for Daniel Ortega’s benefit about how his mother had protested US backing for the contras in the 1980s?

      • 7 Donagh March 24, 2011 at 11:11 pm

        As if he’d wheel out his own mother (not literally) to swing a deal with a national leader. Did you not know about his “tremendous work at home and abroad for the sick , the disabled, those in poverty and those in disaster has benefited millions of lives”.(Copyright: Robbie Burns)

        Actually, I did. That lovely man Eamon Deleany tells us about it.

        Sorry about the long quote, but its too juicy to leave out:

        There is also much on O’Brien’s support for charities and human rights causes, partly inspired by his mother, an activist who used to protest outside the US Embassy in support of the Nicaragua’s Sandinistas. O’Brien mentions this to President Daniel Ortega while he’s investing there, and Ortega signs her a picture, “Greetings to a fellow revolutionary”. A big supporter of Amnesty International, O’Brien has specifically funded its Front Line service for the protection of human rights activists. He was also, of course, chairman of the Special Olympics held in Dublin in 2003, for which he received credit.

        But some cynically said that this was a convenient distraction from the Moriarty Tribunal, which was examining some of his business dealings. And of course, O’Brien has obsessed about the tribunal, probably too much. Given the length of time it has taken this absurdly expensive process to come to any conclusions, he could safely have ignored its torturous ramblings for years and even decades. However, he went to war with it, in a way that many without his money or willpower couldn’t. He was also understandably angry at the way the tribunal operates, not as a court of law, but a forum where allegations can hang around, unchallenged and unproven for years. However, whatever its conclusions, O’Brien has certainly scored a major hit on the tribunal itself, with revelations about its delays, costs and, most startling, mistakes made in the gathering of evidence.

        I love that line: “he could safely have ignored its torturous ramblings for years and even decades”.

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