The first price cap order (S.I. 393 of 1996) was made by the Minister for Transport, Energy and Communications and came into operation on 1st January 1997. It placed a price cap on eircom’s (then Telecom Eireann) tariffs of CPI-6%, therefore leading to an overall downward movement in tariffs. There were sub-caps set on individual services of CPI+2% and a cap on the Lower Quartile bill of CPI.

In 1999 the price cap modified and the cap was set at CPI-8%. Most of the sub-caps were retained as was the cap on the lower quartile bill. From 2000 - 2002 there was a cap of CPI-8% on the basket of retail services, with further sub-caps of CPI+2% on all but one of the services in the basket.

During 2002 ComReg conducted a review of the price cap issuing three consultation documents and a final decision notice in February 2003 (S.I. 31 of 2003). In setting the level of the Price Cap ComReg sought to find the best balance between the interests of consumers and the long term sustainability of the industry. The cap was set at CPI-0% to allow for line rental rebalancing, all sub-caps were removed as was the cap on the lower quartile bill, but it was replaced by a cap of CPI on the median Vulnerable User Scheme bill. The VUS was introduced to help address the needs of vulnerable social groups and provided users with up to €5 (incl. VAT) worth of free calls per month.

The objective of CPI-X type retail price controls is to ensure both that prices for retail customers are at a competitive level and that the regulated operator has incentives to deliver services as efficiently as possible. Of particular concern are low spending consumers who depend on PSTN line access but make few calls. In order to meet the objective, ComReg has recently completed its final review of competition and developments in the markets for fixed narrowband retail access.

ComReg is currently reviewing the appropriateness or not of a retail price cap as a potential remedy for narrowband access services. ComReg document 06/41 was the first of two consultations on this matter. It identified four potential options for ex ante regulation in the identified markets, regulatory forbearance, imposing caps on individual markets and/or services and cost orientation requirements.

ComReg has issued a second consultation document 07/48 in August 2007 on an appropriate scope and structure for a retail price control. In this consultation ComReg proposes to impose two separate price controls on each of the higher and lower level narrowband access services, in addition ComReg proposes to introduce a sub cap on basic telephone line rental within the overall basket cap on lower level access services. ComReg proposes that a CPI-CPI cap on each of the lower and higher level access services for a period of 12 months beginning on the start date of the proposed price cap and a CPI-0% cap in subsequent years. The proposed PSTN sub cap will also be set at CPI-CPI for the first 12 months and CPI-0% thereafter. A final decision was issued in September 2007 (see document 07/76). The submissions received in response to the two aforementioned consultations are available (see document 07/48s).

Additional publications on Price Cap are available