As Eircom gears up for increased competition in the domestic market, latest figures show residential consumers still pay more for national and local calls than customers in 15 of the 19 key countries within the OECD.

A recent survey by the Office of the Director of Telecommunications Regulation (ODTR) found that the Republic lagged behind countries such as Spain, Austria and Switzerland in terms of higher local and national call prices.

Since competition was introduced more than two years ago, 44 general licences and 26 basic licences have been awarded, enabling operators to compete with Eircom. However, residential consumers have not yet experienced the huge reductions in their telephone bills that customers in other countries have seen.

Earlier this week, Eircom highlighted a rapid shift towards the uptake of mobile telecommunications and lower margins on its fixed-line business. This is certainly one factor influencing residential price structures.

However, despite the massive growth in mobile communications, prices remain high in this sector too, according to industry experts. Legal action has greatly delayed the introduction of a third mobile operator and the substantial reductions in call costs which a third player would bring. The fact that there are still only two mobile operators has created an "effective dupoly", according to Mr Tony Geheran, head of business operations at Cable and Wireless. He says approaches to both companies to lease airtime on their networks to customers have been rebuffed.

A Supreme Court judgment expected shortly should facilitate the entry of the third mobile operator. This, combined with the introduction of the third generation of mobile phones (UMTS), should bring prices down.

Likewise, Eircom's competitors believe better residential rates are possible.

"What we have are interconnect charges, we use Eircom lines all the time and have to pay subcontract fees to use these," according to Mr David Bunworth, business development manager with ESAT.

"Paying for distance on copper wire and to enter the telephone exchange is a stumbling block to full competition," he says.

Eircom's competitors are all seeking the unbundling of the local loop. They want to gain access to the copper wire which brings calls into the house and to the switching capability of a local exchange.

"We would control a call from the moment it is made to being received," said Mr Bunworth. "And prices would fall again."

It is simply uneconomic to build a completely new telecoms infrastructure, according to Mr Ciaran Black, business development manager at MCI WorldCom. "There needs to be legislative change to to allow full access to the copper wire."

Some EU countries have already moved to unbundle the local loop, which the European Commission listed as a priority.

"We are looking at ways of short-cutting the process of unbundling and how it can be done quickly," says Ms Etain Doyle, director of the Office of Telecommunications Regulation.

Her office is close to finalising a report on implementing a strategy for unbundling and Ms Doyle says she is not underestimating its importance. Most experts believe it is likely to take at least 18 months. But other developments in the market are likely to bring prices down at a faster pace. Carrier pre-select, a technology which enables customers to choose to use telecoms operators without having extra equipment installed in their homes, was introduced in January.

"This allows an operator a seamless run into a house from an exchange and is liberalising the market," says Mr Bunworth. Esat has been testing this for the past month, but will be introducing it in full next month, he says. Mr Bunworth expects this will double Esat's share of the fixed-line market.

Figures provided by the ODTR show the new entrants' share of the fixed-line market in the Republic increased to 7 per cent from 4 per cent in December 1999.

To date, though, most of the major telecommunications operators in the Republic have targeted their efforts at the lucrative business-to-business market. As a result, prices have fallen faster in this area.

"The volume and value of the business customer is significantly greater," said Mr Geheran.

Cable and Wireless has shifted its international strategy to become business providers rather than residential providers. The company has concentrated on developing voice services using Internet protocol technologies. This service is more expensive than existing networks, but it is seen as an area of rapid growth and one where cost savings can be achieved in the future with an increase in bandwidth.

Diversification into high-growth areas and the provision of both telecommunications and multimedia services are seen as vital by most of the major players in the marketplace.

Cable and Wireless will roll out an Internet service provider (ISP) to compete with Ocean, Eircom and Esat next month. "This will be linked with our global ISP and offer businesses the capability of Web hosting and Web access," says Mr Geheran.

Several operators such as Eircom, Esat, Ocean, Cablelink and Irish Multi-channel are investing in fibre-optic links to offer high-capacity broadband services to enable them to provide a full range of voice, data and video services.

Cablelink, which will be rebranded as NTL in the summer, is spending £300 million (€381 million) on its own digital broadband network. The company will offer telephony, Internet and digital television services direct into people's homes.

The entry of big players such as Irish multi-channel and NTL into the residential telephone market should change things, according to Ms Doyle.

"As competition develops now, the national residential sector will see fierce battles, as have happened in other countries," she said.