A new "flat rate" Internet service from Telecom Eireann could more than halve the company's current lowest priced Net connection charges within two weeks. The rate would make Telecom's offering around £70 per month cheaper than that of Esat Telecom, its main rival.
The Telecom proposal is being considered by the telecommunications regulator Ms Etain Doyle who has the power to approve or veto it.
It is understood that the new service would provide 100 hours of Internet access at a flat rate of between £20-£30 per month. This would reduce Internet charges to 20p-30p per hour. Telecom currently charges 12p per five minute unit, or £1.44 per hour, at peak times and 12p per 15 minutes, or 48p per hour, on evenings and weekends.
If approved, the new rate would give Ireland the lowest Internet connection rates in Europe and would make Ireland the first European country to offer a flat rate service. Despite recent industry deregulation, European telecommunications companies have been reluctant to move towards the US model of flat rate charges for unlimited local phone calls. Telecom believes that under EU legislation, the company would be prevented from offering unlimited calls at a flat rate.
The new flat rate service is designed to benefit moderate to heavy Internet users and encourage all Net users to stay online longer. It would prove more cost effective than Telecom's current offering if users are on-line more than an hour a day at peak hours or two hours in the evening or weekends. Internet users must still pay service providers for an account - usually about £12 a month - in addition to phone charges.
A Telecom Eireann spokesman said proposals for the service were currently with the regulator and they hoped for approval within the month. Once approval was received, he said, they would offer the service "without delay", probably within a day.
Esat Telecom, which is seen as Telecom Eireann's main rival, said it currently had no plans to offer a flat rate scheme through EsatClear, its phone and Internet service. At present, EsatClear offers a bundled service which includes an Internet account and special charges which benefit very low volume Net users. But 100 hours of Net access through Esat would cost about £100 through its regular residential phone service offering.
An EsatClear spokesman said Esat was concentrating on encouraging new users to try out the Internet rather than on offering services to heavy users. He added that Telecom's "interconnect" charges - the cost other phone service providers must pay Telecom for their traffic to pass over Telecom's dominant phone network - were still too high to allow competitors to match Telecom's Internet offerings.
"We'd be happy to try to match those charges if they'd offer wholesale rates," he said.
The Government is eager to promote an environment in which Internet users can remain on-line as cheaply as possible, because analysts believe this will help grow electronic commerce. Analysts widely believe that the high level of Internet use in the United States - over one-third of Americans are on-line, compared to 10 per cent of Europeans - is directly due to flat rate charges for Internet access.
