Telecom Eireann to cut its interconnect rates by 40%

Telecom Eireann has announced major reductions in its interconnect rates, cutting them by up to 40 per cent.

The cost of interconnect rates - the rates Telecom charges other operators for calls delivered over its network - have long since been a issue of considerable controversy between Telecom and the other operators, especially Esat Telecom which complained to the EU about the issue.

The European Commission was expected to announce its ruling on this complaint today but has postponed doing so until next week. A fine of £10 million to £15 million is expected to be imposed.

Telecom said last night that as a result of the cost reductions Ireland now has the second cheapest interconnect rate in Europe. The new interconnect rates will cost on average between 0.6p and 0.92p per minute. A company spokesman said 70 per cent of calls affected were made at the primary or cheapest interconnect rate.

Telecom also said it would shortly announce reductions in Internet access rates.

In a statement Telecom chief executive, Mr Alfie Kane, said the company had introduced "an exceptionally competitive interconnect regime for the Irish telecommunications market to coincide with the introduction of full competition".

He said competitors now have access to interconnect rates which are substantially cheaper than those available in other EU markets which have been liberalised for some considerable time.

Esat Telecom chairman Mr Denis O'Brien said he broadly welcomed the changes in interconnect rates. "Telecom Eireann had to wait five years to give us interconnect," he said. "Thankfully, now the Telecommunications Regulator has forced the company to comply with EU accepted practice."

Under the new interconnect regime, prices vary depending on distance and whether the call is made during peak, off-peak or at the weekend.

Mr O'Brien said he believed the off-peak and weekend rates were still too high. "We intend to raise this issue with the regulator," he said.

Mr Kane said that he expected the benefits of the new interconnect regime to result in reduced prices for consumers in the months ahead.

His spokesman said there was no reason why all operators should not be offering more competitive rates to their customers in the coming months.

The Telecommunications Regulator, Ms Etain Doyle, said setting the interconnection rate "is one of the most complex pieces in the liberalisation jigsaw". She said she was delighted that it was in place for December 1st - when the market becomes fully liberalised - and added she could not have done it without Telecom's co-operation.