Telecom customers likely to enjoy lower bills

Irish home and business consumers can expect a plethora of new phone and online services as well as lower phone and Internet connection rates when full competition begins. The market is likely to split into a handful of wholesale companies using mostly their own infrastructure and many smaller telecommunications providers offering value-added services.

Telecom Eireann repeated yesterday that it welcomed the removal of its monopoly, adding that its board had come to the conclusion some weeks ago that this was the best way forward for the company.

It is understood, however, that the Minister for Public Enterprise, Ms O'Rourke, was unaware of the board's opinion when she convinced the Cabinet to scrap the derogation.

At the heart of the Government's logic was a concern over the perception of the Republic in the international business community. IDA Ireland and others had lobbied ministers that the tag of having a phone monopoly - even when competition already applied in some business areas - was dissuading investors. Within a short time of the decision being announced, the IDA's chief executive, Mr Kieran McGowan, had issued a statement welcoming the move as "a clear message to the market place".

Ms O'Rourke was also convinced that the next wave of high-tech companies would revolve around electronic commerce and the Internet, and she wanted to ensure that Ireland's image was that of a fully-liberalised, cutting-edge economy.

The move represents the biggest shake-up to date in the telecommunications industry and will have an immediate and beneficial impact on the consumer.

Telecom Eireann, which has significantly reduced its long-distance and international rates over the past four years, had planned to continue doing this gradually. Now, the company says, it will step up its reductions in the run-up to the introduction of competition.

Several telecoms companies have been building their own infrastructure and say they merely await the green light to offer domestic consumers their services; others plan to use these networks and that of Telecom Eireann to provide value-added services.

Leading the charge is Esat Telecom, whose chief executive, Mr Denis O'Brien, has said he already controls 25 per cent of the corporate market. Others are likely to include British Telecom - which plans to use the ESB's communications network to reach much of the State - Cable & Wireless and WorldCom.

Ireland's geographic location and its small population and therefore revenue base will limit the number of companies wishing to invest in an expensive infrastructure. But with data telecommunications traffic growing at a rate of 12 per cent a year, it is still seen as an expanding business.

Telecom Eireann, which for the foreseeable future seems certain to run the largest and most geographically spread infrastructure, now sees itself as a wholesale company.

"We will become a wholesale company. In my opinion we have to stop thinking that all competitors are enemies. It is a complex market place and you will actually find companies battling it out on the retail front which are, behind the scenes, having very powerful customer-supplier relationships," the company's chief executive, Mr Alfie Kane said yesterday.

He said that, while there was a normal rule of diminishing returns for new telecoms building infrastructure, the future held almost limitless opportunity in offering value-added services to consumers.

"I think there's a richness in a competitive environment that's not about slugging it out and who's going to dig the road up the fastest; the real innovative battles will be for supplying value-added services. And that's what competition means. Those value-added services will begin to take up a portion of the cake of total telecommunications revenue. I think what you'll see is a bubbling up of innovative thinking and companies," Mr Kane added.

Consumers are likely to see an innovative approach to pricing and could see the end of Telecom Eireann's structure for local calls, one of the most expensive in Europe.

Lobbyists say that, in order to encourage rather than penalise Internet use, customers should be able to pay a flat fee, allowing unlimited access to local call service.

Competition may also herald the end for the Republic's many area codes - and the extra cost they bring. With a population of 3.5 million, some industry analysts argue, there is no real need for any area codes at all; operators could offer just one area code for the whole of the State, as with mobile phones now.