Eircom will cut the price of its high-speed internet service i-stream within weeks. It plans to offer this new service using DSL technology at a monthly fee of close to €50, targeted at the consumer. The current fee for Eircom's i-stream solo product is €107 including VAT.
DSL or digital subscriber line technology is considered vital to promoting wider use of the internet and enabling a range of internet applications ranging from home working to online gaming.
It is also crucial for the provision of cheap access to the internet for small and medium firms.
The uptake of DSL services has been severely delayed by regulatory problems and the relatively high cost of purchasing a service in the Republic until now.
It is estimated that under 3,500 DSL lines have been sold to businesses and residents since the service was introduced last year, placing the Republic at the bottom of the EU in terms of DSL lines.
Eircom is expected to announce its decision to offer a consumer product possibly as early as today.
Its decision to introduce the service is not totally unexpected. Last year in an interview with The Irish Times, Mr Cathal Magee, managing director of Eircom Retail, said the firm would revisit the question of a consumer DSL service in early 2003.
The firm also faces competition from Esat BT which recently presented its consumer DSL offering in certain areas. This is available at a monthly fee of just under €50.
Eircom's decision to offer a cheap consumer DSL product is likely to have a significant impact on the domestic market. In the UK, a similar decision by British Telecom last year prompted strong growth. More than 500,000 DSL lines had been sold in Britain by December 2002 and there were 30 million DSL connections worldwide, according to the UK-based research group Point Topic.
Eircom's move to launch a consumer DSL offering will please the Government and the Commission for Communication Regulation, which this week called on Eircom to introduce a more reasonably priced DSL product.
"Current price levels are not attracting significant numbers of customers, creating the danger that Ireland will slip further behind in the take-up of broadband by small and medium-sized firms and residential users," wrote Ms Etain Doyle, chairman of the Commission, in an official paper.
Future Delivery of Broadband in Ireland also highlighted the lack of investment in the cable TV networks in the Republic for many years, and the current financial problems faced by the cable operators, removed the competitive catalyst which spurred competition in other countries, and a speedier build out of DSL.
NTL halted the roll-out of its own high-speed internet service in 2001 due to financial pressures.
But Ms Doyle argues that NTL's emergence from chapter 11 bankruptcy and the strong performance of its Irish subsidiary in recent results may prompt new interest from the firm in the direct provision of internet services.
