Telecom will cut costs to consumers by £130m

Telecom Eireann has announced its biggest package of price cuts, totalling £130 million, including substantial reductions in Internet and international phone charges. The package will bring to almost £350 million the amount of reductions introduced over the past four years.

Telecom's chief executive, Mr Alfie Kane, also pledged yesterday that as part of the package a number of schemes aimed at cutting call charges for residential users would be introduced later this year.

From July, the cost of accessing the Internet from 8 a.m. to 6 p.m. will be reduced by almost one-third. Spending 15 minutes on the Internet will cost 35p, instead of 57p. The company said yesterday it was committed to driving down the costs of using the Internet further.

From June 15th Telecom says it is bringing in significant price cuts in the key markets which represent 95 per cent of all international calls Britain, US, Europe, the Far East and Australia. In addition, a special weekend rate is being introduced.

Telecom said it would introduce other initiatives later in the year including reductions in peak-rate local calls, a number of discount schemes for business and residential users, reduction in the price of trunk calls within Ireland and reductions in the price of ISDN services.

Mr Kane told The Irish Times that the company was now moving towards becoming a wholesaler to the telecoms providers. It will be reducing the cost of leased lines by 30 per cent on average from July. Biggest cuts will be on long-distance leased lines. He said competitors to Telecom would not be just those who put in their own infrastructure, but others who wanted to provide services without building it. He added that Telecom saw significant future revenue streams in this area.

Mr Kane said there would be more price reductions and there was still a need to get costs on a competitive basis.

Adding that it would be "financial suicide" to cut rates without increasing the volume of business, Mr Kane said he was creating a "balanced company".

"Our business strategy is threefold: we want to reduce our cost base, cut tariffs to competitive levels and grow our business," he said.

The tariff reductions were welcomed by the Minister for Public Enterprise, Ms O'Rourke, and the telecoms regulator, Ms Etain Doyle.

"These reductions, and particularly the reductions in Internet charges, are a positive response by the management and employees of Telecom Eireann to the competitive challenges ahead," said Ms O'Rourke.

Ms Doyle said the cuts were "a classic example of the way in which competition benefits consumers", adding that she wanted to see further reductions in the wholesale rates Telecom Eireann charges other phone companies.

Esat Telecom dismissed the price reductions as "selective", adding that they would not take immediate effect and would "make no impact whatsoever on the cost of local and national calls".