Esat has applied to access Eircom's local telecoms network and will use it to offer high speed Internet services to customers in five urban centres across the State.
The decision by Esat to pursue a process known as local loop unbundling represents a major challenge to Eircom and is a significant milestone in Irish telecoms' liberalisation.
Esat is planning to introduce a technology called symmetric digital subscriber line (SDSL) in urban centres outside Dublin including Limerick, Cork and Galway.
The company has begun a fast track programme closely monitored by the telecoms regulator and has begun negotiations with Eircom to gain access to its local telephone exchanges.
ESAT will initially provide services in five areas including Galway, Cork and Limerick by April 2002 before it rolls out the technology to more than 20 towns across the State.
The cost of the fast-track programme is not known but the whole Esat proposal is projected to cost more than €25 million. The Government will provide up to €10 million in grants to the project under the National Development Plan.
The main beneficiaries of Esat's move into the digital subscriber line market will be small- and medium-sized businesses. Until now companies have been forced to wait long periods for leased lines from either Eircom or competing companies.
However some forms of DSL technology used in the US can be installed by the end user without the need to wait for technicians.
By using SDSL technology, companies should be able to gain cheap broadband connectivity. Prices for similar services in the UK are roughly £4060 per month.
The Esat deployment would be the first of SDSL technology in the Republic as Eircom has chosen to introduce asymmetric digital subscriber (ADSL) line in Dublin.
Both types of technology increase the digital capacity of ordinary phone lines and enable consumers to use high-speed data Internet services many times faster than dial-up modems.
But SDSL provides the ability to send large chunks of information at high speeds as well as receiving them, according to telecoms consultant, Mr Enda Hardiman. "This would enable Esat to use SDSL to offer leased lines," he added.
Mr David Taylor, director regulatory affairs at Esat, said the introduction of SDSL technology would enable the firm to break Eircom's stranglehold on the leased line market.
However, while most telecoms experts welcomed Esat's move last night as a crucial way to extend broadband connectivity to the regions, many also urged caution.
Since the European Commission took the unusual step of mandating local loop unbundling from 1st January 2001, few companies have carried through on initial proposals.
Although up to 10 firms initially expressed interest in gaining access to Eircom's local network, only Esat has made a formal request to gain space in local telephone exchanges.
Eircom has also issued a legal challenge to the pricing structure which the telecoms regulator, Ms Etain Doyle, has laid out for unbundling, claiming it does not allow them to recoup investment in the local network.
Last night Ms Etain Doyle said her office was providing as much support as possible to allow unbundling to take place. However, she also moved to dampen unrealistic expectations.
