Eircom agrees deal for social benefit scheme

Eircom agreed a deal with the Department of Social and Family Affairs yesterday to reduce the impact of its proposed rise on the cost of a special cut-price telephone service for the elderly.

In a move to offset further criticism of its plan to increase line rental fees for the third time in a year, Eircom will raise the price of its social benefit scheme by 47 cents excluding VAT.

The telecoms firm announced in early January that it would increase the cost of the discount scheme by €1.74 to €26.44 per month from February 4th. But following talks with the Department, Eircom has agreed to raise the cost of the scheme by 47 cents to a fee of €25.17 per month.

The cost of the social benefit scheme will now increase by the current rate of inflation of 1.9 per cent, rather than the 7 per cent increase initially proposed.

But as it stands, pensioners and welfare recipients will, for the first time, have to pay towards the cost of the scheme. There are 300,000 people using this scheme.

Until now, a Government subsidy worth €24.70 has covered the full cost of Eircom's social benefit scheme. But there has been no commitment from the Department of Social and Family Affairs to increase its subsidy.

A spokeswoman for the Department said last night that it was considering whether it had the budgetary capacity to raise its telephone allowance. In the first nine months of 2003, the Government paid €84.1 million in telephone allowance subsidies.

Under Eircom's new deal with the Department, the firm will also amend the terms of its social benefit scheme by removing €1 call credit that had been previously available to its members.

But Eircom will, for the first time, allow members of the social benefit scheme to join a parallel discount plan, called the Eircom vulnerable user scheme.

Until now, this has had fewer than 400 members. It enables low users of telecoms services to get up to €5 free call credit. However, the next €5 worth of calls are charged at twice the normal rate.

An Eircom spokeswoman said the firm was happy with the new scheme, the net effect of which would mean pensioners would not face any increases in prices.

Eircom's proposed hike in the price of its social benefit scheme was one of several price changes announced in early January. The most controversial of the price increases was the firm's decision to raise line rental charges for the third time in a year in February.

Eircom executives are likely to face a grilling from the Oireachtas Communications Committee tomorrow about the proposed increase in line rental.