Esat BT is opposing a proposal by the Commission for Communications Regulation (ComReg) to levy fees from the telecoms operator to help Eircom fund its own universal service obligations, writes Jamie Smyth

The State's second-biggest fixed-line firm has told ComReg that any charge levied on other licensed operators would further "undermine what little confidence exists" in the market.

Esat BT's comments follow Eircom's recent proposal that ComReg should radically amend the universal service obligation (USO). This is Eircom's obligation to provide a telephone line to every household and business in the State. It was brought in to counter the former state-owned telecoms group's effective monopoly.

Eircom has told ComReg the USO costs it up to €40 million every year.

But in a consultation paper sent to ComReg recently, Esat BT says it does not believe that effective competition in the Irish market for basic telephone services has been established. It also warns against introducing a USO levy on other telecoms operators.

"Any further erosion of that poor sentiment by potentially paving the way. . . for some future USO charge might be levied on the OLO [other licensed operators\] community will further undermine what little confidence exists at present," it says.

Esat BT also argues that any proposed fund would have to take account of inefficiencies at Eircom to ensure these were not being subsidised by rivals.

But Esat BT does support one of Eircom's key proposals made to ComReg - the firm should be allowed to charge extra installation fees to users who request phones in geographically remote areas.

The paper says that British Telecom has the flexibility to raise connection charges if installations exceed a "100 man hour rule" and it proposes that Eircom be granted similar flexibility.

Yesterday ComReg told an Oireachtas committee that other operators may be asked to share the responsibility for Eircom's USO. A final decision by ComReg is expected shortly.