Telephone prices are expected to fall rapidly over the next six months following a Government move to scrap Telecom Eireann's monopoly on voice telephony a full year ahead of schedule. The move, which will see competition on offer throughout the State by the end of the year, is also expected to help attract more investment by communications and Internet companies.
The decision took many in the industry by surprise and heralds the biggest shake-up in the sector for many years. Ordinary consumers and businesses could soon be able to opt for a flat-fee for unlimited local calls, while residential customers will be able to use a range of providers for long-distance calls.
The decision was immediately welcomed by by IDA Ireland; the agency's chief executive Mr Kieran McGowan said it sent a clear message to the global marketplace and would help attract investment from telecommunications and Internet-based businesses.
The derogation was reckoned to be one of the attractions for Telecom Eireann's strategic partners, Dutch telecommunications group KPN and Sweden's Telia, which own 20 per cent of the company and have an option on a further 15 per cent.
But the decision was also welcomed by Telecom Eireann. Its head of corporate communications, Mr Gerry O'Sullivan, said last night that the company was now ready for competition.
He added that both KPN and Telia were "fully supportive" of the decision to end the derogation. Representatives of both companies attended the Telecom board meeting on April 27th which decided that an early end to the derogation was the best way forward, Mr O'Sullivan said.
The phone company, which has dramatically reduced its long-distance and international call charges over the past few years, would now speed up its programme, cutting call rates further, he added.
The announcement came late last night in a statement from the Minister for Public Enterprise, Ms O'Rourke, who said the cabinet had accepted her own recommendation to remove the derogation before the end of the year.
"This derogation was to continue to January 1st, 2000, but it is in the country's interest that full competition is introduced as soon as practicable," Ms O'Rourke said. "I believe that this will send the correct signal to the market that Ireland is a place to invest in telecoms."
Sources suggested that it would take several months to prepare the ground, but that there could be competition by Christmas.
In the weeks ahead, the Director of Telecommunications Regulation, Ms Etain Doyle, will issue the rules under which the competing telephone companies will operate. These will include provisions forcing Telecom Eireann to share access to its lines into homes and businesses.
Several companies are believed to be interested in entering the market. These include a joint venture by the ESB and British Telecom, Esat Telecom, WorldCom and Cable & Wireless. The move may also increase the price tag for Cablelink, which is now up for sale. Its network could provide the basis for voice telephony services, although this would require substantial extra investment.
"It is a brave decision and the right decision," said Mr Denis O'Brien, chief executive of Esat Telecom. It vindicated Esat's investment strategy in laying a fibre network, he said, and it planned to offer a full range of services to customers.
The managing director of Cable & Wireless, Mr Eddie Brennan, described the announcement as "fantastic news" which would aid industry and the consumer alike. Mr Sean Melly, managing director of Worldcom in Ireland, said it would encourage new investment.
