Mea Megathread

[Blooms]

Re: Response to Manx Warrior 8/8/05

 

The Pure Pricing report makes for interesting reading.

 

According to Companies House, Cardiff, Pure Pricing's primary business is "software consultancy & supply". Their last set of published accounts hardly inspires any confidence that PurePricing is a major player in the telecoms industry.

 

Further, its rather shocking that such a report, paid for and commissioned by Manx Telecom, could be used to respond to Hazel Hannan's question in the House of Keys.

 

A certain Tim Craine is mentioned in the PurePricing report. A quick google search brings up a link to him on the O2 website, MT's parent company!:

 

http://crreport.o2.com/cr/report2005/report_28.asp

 

Is it really appropriate for the IOM Business Director to be seen supporting MT/O2? I certainly cant imagine that any of Mr Blair's staff would endorse a UK Telecoms provider.

 

It really does beg the question as to who is in control here?

[joeyconcrete]

We need a company that going to keep the IoM in the forefront of telecoms technology lets not rubbish the only company that could deliver some true competition to MT. Just look at the some of the headline prices of broadband in the UK. It’s less than half of MT’s residential rate.

 

I partly agree, but the reality is the prices are higher for two reasons, 1) the off island link price while the UK companies have a local tail, and 2) MT have a nice profit margins

 

That’s for the faster 2mb service and a static IP which manx residential users can’t have. If one wants a static IP then MT force the usage of the business service at £88/month.

 

I'm sure the lack of static IPs for residential users is a policy recommended by RIPE (or was) which is why PPPoE/PPPoA based broadband is the norm for residential users in the UK - mainly to preserve IPV4 address space. Service providers also like to discourage home users operating services that require static IP addresses as they see them as business customers. I'm certainly not saying its right, but thats my understanding. Things like dynamic DNS quite happily achieve whats required for the small few that require a permanent presence on the internet. The latest generation services do all sorts of fancy things with mail queuing etc.

 

Yes I’m with you on this one, there’s plenty of capacity as I have explained in previous postings. As to whether the capacity would be taken up, by other third parties is another story. I'm sure its almost a done deal that MT are to take over the FOC.

 

I'd be very surprised - surely something like this would have to come up for tender. I seriously see MT having sole control of the cable a bad thing. Although surprised, anything is possible with the current government. I'm sure MT's reasoning is not all about getting extra capacity, more to prevent competition.

 

Personally I've never liked how a ILEC can operate as an ISP, its the same situation in the US and in the UK. It makes it difficult for a true 'ISP' to compete, because said telecoms companies can fiddle with/waive the telecoms costs to suit them and to get ISP business - something that a normal ISP cant do. What makes you think MT have the FOC?

 

I believe this has already been tried via the Manx Cable Co. Strong lobbying from MT and friends seems to have killed this off, witness we have a Network Operations Centre (NOC) in Ridgeway Street which cost some £250,000 funded by the DTI lying idle just like the FOC. Seems strange that the DTI should build a NOC then say the MEA business case won’t hold water.

 

MT are bound to lobby against this. Its not in MT's interest to have competition and have cheap off-island phone calls. Throughout this whole thing I'm amazed no one from the DTI has stood up and detailed their involvement in this whole fiasco. This is the one piece of the puzzle I dont get.

[Gladys]

Concrete, I don't understand the techno bit, but I am feeling that this has a lot to do with the whole fiasco!

 

As I recall (and I am sure someone will put me right if memory has distorted things) but there was quite a lot of fanfare about this communications facility, then MT had its licence renewed and then the sh** hit the fan re MEA borrowing?? Am I wrong?

[ManxWarrior]

Hi - concrete posting Aug 11 2005, 10:34 PM

 

Generally I think we are singing from the same hymn sheet.

 

Just a couple of points:

 

(1) An ever increasing number of UK ISP’s are offering static IP on residential broadband. Ones I have had personal experience of are OneTel & Zen. I am noticing many other ISP’s now offering the same. I find it useful for Home-workers to have a fixed IP for maintenance and updates etc.

 

(2) UK ISP’s don’t seem care about one running business services on a residential line. Their attitude is to just generally crack on and if you don’t mind running on the higher contention ratios then that’s fine by them.

 

(3) I don’t think MT has the FOC. I see the Treasury Department wanting to put the FOC out to tender. If it should go out to tender then I think we both know that MT would get it. In that sense it’s a ‘done deal’.

 

I like the term FOCing fiasco (inspired by Gtbb), it all seems a fine example of NonConsensus Government. We have a boxing match going on with a contestant in each corner, MEA, DTI, Treasury and Comms Commission. Meanwhile the Referee (David Gellings Government) has been out having a smoke, for the last two years since the 2003 Telecoms Act. I’d like to know how much money as been spent on consultants and counter-consultants, by each contestant. I could probably retire on the proceeds. Meanwhile the real looser of this fight are IoM Public Co Ltd. It’s a double whammy for Joe Public too, he pays for the fight and ends up paying for higher telecoms too. The fight so far is that the poor MEA, the peoples champion, are getting hammered by both Treasury and Comms-Commission. As you say, Concrete, the DTI are strangely quiet. Meanwhile MT are betting heavily on the outcome of the fight and are preparing to take all. I wouldn't go as far to suggest that MT are sponsoring their prize fighters to win.

[Alias]

In reply to 1, as concrete said RIPE will discourage the use of static IPs, which means that MT would have more likelihood of being turned down next time they go to buy more IP addresses.

 

Do we even want MT to be at the forefront of technology? Anyone remember '3G' ... (now that 3.5G is actively being set up over here)

[Chinahand]

The amount per unit is 2.7 pence. Maths isnt my strongpoint but I calculate this to be £27 per megawatthour. This seems to be an extraordinary amount to be be paying for a fuel cost adjustment when power can be bought wholesale at £31 per megawatthour. Offpeak power could be bought for less than the MEA fuel cost adjustment. See this link for some, admittedly limited price information Wholesale Power Prices

I for one do not believe this adjustment can possibly be correct given the cost of wholesale power. The majority of power in the UK is generated by gas fired plant and we are led to believe that is the case in the Island as well.

Is the MEA really so inefficient that their raw fuel costs exceed the cost at which power can be bought for ? .... I think we should be told

<{POST_SNAPBACK}>

 

You are right Butterfly Maiden that the Fuel Cost component in the per unit price charged was 2.7p and this equals £27 per MWh. The 2003 accounts give the average fuel costs between 1999 and 2003 at between £21.1 and £30.8 per MWh.

 

During the Financial Year to 31 March: 1999 2000 2001 2002 2003

Fuel/Import Costs per kWh Sold Pence 2.11 2.79 3.01 2.59 3.08

 

The Fuel price for 2004, 2005 hasn't been published yet [delayed by all the scandals!], but will probably be higher given the increases in fuel costs in the last few years.

 

The FCA level of £27 per MWh was set in 2004 and is therefore only an approximate measure of the fuel costs.

 

The FCA has been rebased to zero with the new price rises. This caused initial panics as the old price was made up of a unit price of 7.61p plus an FCA of 2.7p = 10.31p. The new unit price published was 11.04p but no mention was made of the FCA. People panicked thinking it was unchanged at 2.7p giving a total of 13.74p ... in fact its now zero. Any price increases in the fuel costs over the fuel budget for this year will result in an increase in FCA. In other words if this year the fuel budget is £30 per MWh and next year its £31 per MWh then the FCA will be 0.1p per unit on top of the Unit price.

 

The electricity prices you are quoting I imagine exclude distribution costs, ie they are exit prices from the power stations.

 

MEA Trading monitors the price it can buy in electricity via the cable vrs the price it can produce it itself and makes the decision on whether to import via the cable or not. You are correct that often at night the Island's electricity is provided entirely via the cable. The issue is complicated by maintenance scheduling etc.

 

I think it has always been acknowledged that it would be cheaper to totally import power from the UK (see the former Board's comments in the appendix 2 of the PKF report)

 

http://www.gov.im/cso/

 

This was over ruled by the Government who wanted to keep generation going on the Island. This was a political decision and not one made by the MEA.

 

As I've posted before though, don't think that if there were two cables you'd have the same prices as the cheap areas of the UK at 7 or so pence per unit. The IOM's prices are not so different from Northern Ireland's and the distribution losses via the cable and the distribution costs of buying the electricity in from where ever its generated would probably leave costs still well above levels in NI which are 9.95p per unit. We are simply too small to be able to bulk buy enough power to get significant discounts. The energy traders see us as very peripheral in the amounts we want to buy. ICI will be a far more important customer!

[WilDDog]

The top and bottom of this whole MEA saga is

 

"someone somewhere signed a loan agreement for a vast amount of money "

 

They're responsible.

[Gladys]

Yep, you're right, but why did they sign that VLC?

[Chinahand]

The top and bottom of this whole MEA saga is

 

"someone somewhere signed a  loan agreement for a vast amount of money "

 

They're responsible.

<{POST_SNAPBACK}>

 

 

Are you really saying you'd rather have a half finished power station, a series of collapsed contract agreements, and the MEA, MCC, PGT, the Treasury etc all involved in extensive legal actions all due to the MEA not being able pay for the completion of the infrastructure projects.

 

That "vast amount of money" allowed the projects to be completed successfully. I've said it before and I'll say it again; these projects are viable over their full lifetimes.

 

The way Treasury and the politicians have reacted and dealt with this issue to me clearly shows the MEA were correct to borrow via MCC and then at a later date put the loans on a long term basis with Tynwald approval. If all this had happened when the MEA was still a major debtor to its contactors the entire project would have been on a cash-in-hand basis before you can say "cashflow problem" and that would have caused the contracts to collapse; and that would have left the Island with an inadequate power supply.

 

What do you think would have been the consequences for the finance sector if they'd been unplanned outages when the only supply to the Island was a single cable before the reinforcement work was completed and when Pulrose was shut down due to the building work.

 

As I've posted before the evidence of the PKF report makes it clear that the old MEA board did NOT believe they were doing anything wrong. In 1998 MCC had borrowed £35 million unapproved by Treasury; no one had batted an eyelid.

 

As far as they were concerned they'd reported everything necessary to treasury. They had no idea that Treasury would go beserk and MAKE the loans illegal by saying they are unapproved.

 

The old MEA board started a court action to show that, if necessary, the legislation allows retrospective approval, but that was stopped by the new board.

 

I'd really like those of you out there with a legal mind to think about that cos as far as I can see the result is that as Treasury insists it did not give approval, and will not give retrospective approval, KPMG cannot fail but to find the loans illegal as the only thing that makes them illegal is lack of Treasury approval. And then what happens: Treasury, who have made the loans illegal says it can't repay illegal loans ... what a lovely circular argument to allow Treasury to renege on an agreement entered in good faith by both parties.

[Gladys]

Thanks Chinahand, a well considered post as usual!

 

Have discussed this legality issue with a few friends. Aren't KPMG applying to the court for ruling as to whether the borrowing was legal or not? If they turn out to be illegal and Treasury cannot give them retrospective approval (perhaps it can't not won't) then the only course open to government is to pass legislation to ratify the loans. Otherwise, it can do nothing about the loans. If they are illegal government cannot make any payments (it may be a bit like not having to honour a gambling debt).

 

On the other hand, the court may find that the loans are illegal and each party should be put back into the same position as they were before the illegal loans were made! At which time perhaps the only course open will be to negotiate alternative borrowing. Possibly tricky after this debacle!

[WilDDog]

Chinahand

 

The costs should of been sorted out before the contracts started then there wouldn't be this fiasco, and there wouldn't be a need for you to say,

 

Are you really saying you'd rather have a half finished power station, a series of collapsed contract agreements, and the MEA, MCC, PGT, the Treasury etc all involved in extensive legal actions all due to the MEA not being able pay for the completion of the infrastructure projects.

Most good companies sort out the money side of things before a contract is signed so your statement above is totally irrelevant.

This whole fiasco is down to someone being totally irresponsible and that person is the person who signed the loan agreement and took the project on without the proper costings for the work that was entailed.

[Virginia P]

1. ManxWarrior, Chinahand, Bloom etc.

 

2. Disgraced former MEA Directors

 

 

Are they related by any chance?

 

I think we should be told

[ButterflyMaiden]

1.  ManxWarrior, Chinahand, Bloom etc.

 

2.  Disgraced former MEA Directors

 

 

Are they related by any chance?

 

I think we should be told

<{POST_SNAPBACK}>

 

Virginia .. if we can assume you are confusing MEA directors with members of the MEA Board (there is a difference) on what basis do you consider they have been disgraced ? My understanding of this whole, sorry, saga has been the facts have not been revealed to the public.

Regarding Chinahand et al .... I for one have been extremely impressed by the quality of the information they have supplied. Please dont drive them away

[Virginia P]

Their posts go way way beyond the content of the PKF report.

 

The odour of Rattus Norvegicus filled the air.

[ButterflyMaiden]

Their posts go way way beyond the content of the PKF report.

 

The odour of Rattus Norvegicus filled the air.

<{POST_SNAPBACK}>

 

Do the people you refer to, or more correctly, do their posts on this forum have any credibility ?

If they do .. and you seem to think the posters are in some way connected to the former MEA Board .. then we are enjoying the opportunity to hear the other side of the story.

If they dont .. then there is no rat to smell.

For what it is worth .. I personally have some difficulty in believing a group of businessmen ...who had impeccable personal CV's ...suddenly and simultaneously became incompetent to the extent that none of them could manage a utility in the Isle of Man. On that basis .. I have treated the Treasury version of events with the greatest scepticism and I also have considerable difficulty with the DTI position that none of this had anything to do with the department. Clearly the Manx Government position is a nonsense and, if I may say so, is an insult to the intelligence of the electorate.

I do agree with you in so much as I believe we should be told !