The Minister for Public Enterprise, Ms O'Rourke, is to tell telecoms companies she wants to see price reductions of approximately 20 per cent for customers. The telecoms sector is fully liberalised from today and intense competition is expected as new players enter the market.
Ms O'Rourke will address telecoms industry leaders this evening at a reception to mark full deregulation of the market. Deregulation was introduced by the Minister 13 months ahead of schedule as she feared Telecom Eireann's monopoly in the residential voice market could retard development of the industry.
From today telecoms firms will be able to compete with the State operator for residential customers. The first shot in the war was fired by Esat Telecom, which declared yesterday that it wanted to be the number two in the residential market.
The company, through its subsidiary Esat Clear, claimed its pricing structure was at least 1015 per cent cheaper than Telecom Eireann - a claim quickly rejected by the State company.
Esat is introducing per second billing (instead of per unit billing which Telecom Eireann uses) for customers, a local call rate for the whole of Ireland and just four price bands for all countries.
It is targeting customers who spend a minimum of £100 every two months on their bills with Telecom Eireann.
Esat, which is spending £20 million this year investing in the necessary infrastructure, said 450,000 customers fall into this category. The company will install an autorouter free of charge in customers' homes and there is no contract or minimum signing-on fee.
It is also introducing pay-as-you-go Internet access. The move is expected to pose a serious challenge to Internet service providers who have ongoing monthly or yearly charges.
Last night a Telecom Eireann spokesman said the rate normally quoted internationally is for a three-minute call, and Telecom is 40 per cent cheaper than Esat for such a call. (Esat unveiled a sample list of prices for calls which are 3.7 minutes - it said research showed this is the average length of a call).
The spokesman also said that for 15-minute off-peak call, Esat is almost three times as expensive.
Today's full opening of the market provoked a flurry of activity and announcements yesterday. The office of the director of telecommunications handed out 29 licences to companies which want to compete in the market. The recipients included current players in the market, all of which are now fully answerable to the office.
A report by the National Competitiveness Council published yesterday also said electronic commerce would be the most important sector of industrial development over the next five to 10 years.
To coincide with the report, Telecom Eireann announced that next year it will invest £100 million in broadband technology.