Eircom to introduce flat-rate packages

Eircom plans to offer residential customers a range of flat-rate telephone packages that include line rental and calls from June.

The firm, which controls 90 per cent of the residential market, hopes the new bundled services will help it to claw back thousands of customers who have recently defected to rivals.

However, Eircom's rivals are strongly lobbying the Commission for Communications Regulation (ComReg) to block the proposed June launch for fear it will seriously limit telecoms competition.

ALTO, a lobby group respresenting rival operators, has written to ComReg warning that Eircom's plans "present a significant danger to the development of competition in both the broadband and telephony sectors."

The letter, which has been seen by The Irish Times, raises concerns that Eircom will bundle internet, line rental and calls into one service for a flat fee. It argues that Eircom has not made equivalent wholesale packages available to its rivals yet and urges ComReg to veto Eircom's launch.

Eircom is currently only planning to bundle calls and line rental into flat rate packages but Mr Iarla Flynn, ALTO chairman, said this would still hurt rivals because a system to enable Eircom competitors to offer line rental was only in development.

Mr David McRedmond, Eircom's commercial director, dismissed ALTO's fears and confirmed that the firm would offer the packages as soon as possible.

"These products are good for customers and offer good value," he said. "If ALTO has a problem with it, that is their issue."

By bundling line rental and call packages together in flat rate bi-monthly tariffs, Eircom hopes to attract customers who want to manage their bills better. Eircom users are currently charged on a per minute basis and cannot benefit from flat rate charges that allow users to plan their bills.

But the new packages will also deflect attention away from Eircom's line rental charges, which are now the highest in Europe.

In March Eircom raised its line rental fees by 7 per cent to €24.18, more than €10 above the European Union average for 2003.

This was the third successive rental hike in a year and provoked a furious response from consumer groups and the Government, which has now intervened to introduce competition for line rental services for the first time.

Eircom is under pressure to introduce the bundled services in the face of tougher competition from rivals such as Smart Telecom and Esat BT. In the last three months of 2003 the firm lost 20,000 fixed line telephone customers to rival companies, and analysts predict this trend will continue following the furore caused by its line rental increase.

A ComReg spokesman confirmed Eircom had submitted plans to launch bundled packages. He said these were still under consideration by ComReg. Davy Stockbrokers, initiated coverage on the stock yesterday, setting a fair value price target of 175 cents. Eircom closed last night down two cents at €1.46.