The full extent of the biggest shake-up in the history of the telecommunications market now depends on crucial decisions that must be taken within weeks. Many private companies hoping to compete in the market when Telecom Eireann's derogation ends will insist on knowing the ground rules before committing resources and capital.

The Government's unexpected decision to scrap the voice telephony monopoly a year ahead of schedule has greatly increased the workload on the telecommunications regulator, Ms Etain Doyle. Her office must have an entire regulatory system in place well in advance of the December 31st deadline. Ms Doyle today begins a recruitment drive to boost her team of 40.

She must design an interconnection agreement, drawing up the rules under which the customers of one company can use the network of another - and how much it must pay its competitor.

Companies must also know exactly how the universal service obligation system will work. This is the mechanism by which rural residents and businesses are guaranteed service at the same rates as those in cities. Telecom Eireann has suggested that this would mean a central fund, into which all companies would pay, or be paid, depending on the level of provision of commercially non-viable services.

Logically, the company's chief executive, Mr Alfie Kane, said yesterday, this fund would start when competition started. In a foretaste of the debates to come, he also suggested that the fund might be retrospective, allowing Telecom Eireann credit for infrastructure it had laid down in recent years.

Were this system adopted, companies entering the market would, in effect, be greeted with a bill for their contribution to the infrastructure they will "piggyback".

Nonetheless, the decision by the Government has been cheered by telecommunications companies. One of the largest, Esat Telecom, said the move would benefit every consumer in the State.

"Liberalisation was inevitable, but the fact that it has been brought forward is fantastic news for phone users all over the country," said Mr Denis O'Brien, Esat's chairman. "It is all systems go at Esat Telecom and we are ready for this whole brave new world of telecommunications in Ireland."

Last year, Esat announced a partnership with CIE to use the rail network for the laying of high-capacity fibre optic cable around the Republic.

Other competitors are likely to include British Telecom, which has teamed up with the ESB to construct its own network across the State, and WorldCom, which has already begun constructing a fibre optic ring around Dublin.

The ending of the derogation has also received an unqualified welcome from the business community.

The move "is sending out the rights signals to the marketplace", according to Mr Tommy McCabe, assistant director for trade and industry affairs in IBEC. It would make Ireland a more stable and attractive location for investment in telecommunications and would result in more competition in the provision of telecommunications services, he said.

Meanwhile, Government sources said last night that the Microsoft mirror site at the centre of a controversy earlier this week would definitely not be re-located to Ireland in the immediate future.

The sources stressed that Microsoft's decision not to move the site from London to Ireland - which would have created up to 50 direct and indirect jobs - was not because Telecom Eireann's technical abilities were in any way in question. However, the fact that Telecom Eireann is not part of a major international corporation could have diminished Ireland's attractiveness, the sources speculated.

Yesterday, Telecom Eireann said it had secured two separate contracts from Microsoft which Mr Kane said represented "clear evidence that Telecom Eireann can provide infrastructure for the most sophisticated of clients".

The first project involves an internal communications system at Microsoft's European headquarters in Dublin, and requires massive capacity; the second will allow the software giant constant high capacity communication across the Irish Sea to its London operations.