Eircom faces a cut in charges

Eircom customers can expect reductions of up to 9 per cent a year under new proposals being drawn up by the Office of the Director of Telecommunications Regulation.

The regulator, Ms Etain Doyle, has drawn up a basket of services under which the amount Eircom can charge will be capped from January 1st.

A similar price cap is currently in existence up until the end of the year, whereby prices for these services must be reduced by 6 per cent minus inflation each year.

The new proposal envisages the price of certain services being reduced by between 7 and 9 per cent - minus inflation - each year for three years. The proposals are included in a discussion paper on which Eircom and other operators can make submissions. The services include local and trunk (inland) calls, operator-assisted calls, rental and connection charges for telephone lines, ISDN connections, operator services and calls from payphones.

The price for any individual service in the basket may not increase by more than 2 per cent per annum, plus inflation.

However, the basket of services does not include international calls, where, according to the regulator, competition is developing more quickly. The regulator said the reductions would be in the bills of most residential users and small businesses. Ms Doyle said the proposed price cap set out to achieve the best deal for users while fairly balancing the interest of other parties, "including Eircom itself and the other operators in the market".

She said the proposals were based on information available to her office.

They would be reviewed in the light of the regulatory accounts for Eircom which were expected at the end of this month, and information from Eircom and others during the consultation.

Earlier this month, Ms Doyle publicly criticised Eircom over a delay in submitting details showing the breakdown of the profit and loss on its various call types and rental and connection charges.

An Eircom spokesman said last night that the company had already "introduced very significant price cuts before the price cap was introduced and would continue to reduce prices".