Telecoms prices should fall following a decision yesterday by the Commission for Communications Regulation (ComReg) to force Eircom to cut the fees it charges firms to use its network, writes Jamie Smyth, Technology Reporter

The decision is a major blow to Eircom which had argued for a significant increase in the fees during a 13-month evaluation by ComReg of its network. And in a statement last night the company said it had been left with no choice but to appeal the regulatory decision to the High Court.

Eircom will now be forced to charge rival operators €14.67 per month to access the last mile of its telecoms network which enters every Irish home. This amounts to a reduction of almost 12 per cent from the interim rate of €16.81, which was set last year pending the review by ComReg.

Esat BT, Eircom's  biggest rival in the Republic, welcomed ComReg's decision last night and said it would seek to pass on the price reductions to its customers.

Competitors to Eircom such as Esat BT and WorldCom currently use Eircom's local access network to provide high-speed internet services. It is likely they will use the last mile of the network for phone services shortly.

The 12 per cent reduction in prices should lead to lower telecoms costs for consumers and business. But ComReg said yesterday the cost of accessing Eircom's network is still among the most expensive in Europe, ahead of only Britain and Luxembourg.

"While Ireland is unlikely to have one of the lowest cost bases in Europe, due to its demographics, there is considerable scope for price reductions," said ComReg in its decision notice.

ComReg's decision also strongly criticised Eircom for setting an "unjustified and inappropriate" pricing proposal, which was twice the European average.

The regulatory body said it had written to Eircom directing it to adjust its submission to reflect a reasonable level of efficiency.

The decision is a major blow to Eircom which had argued that it should be able to charge a monthly fee of €27  for rivals to access its local network.

The firm based these charges on the costs which it says it incurs maintaining and running its local network, the copper wire which enters every Irish house.

But ComReg's review of its network, which will form the basis of a raft of subsequent regulatory decisions, has concluded Eircom remains an inefficient operator.

This mirrors comments made by the chairman of the Competition Authority this week, Dr John Fingleton, who said Eircom had not made the type of substantial progress on efficiency that is possible and should be required.

Real competition had still to be introduced in the telecoms market, added Dr Fingleton, pointing to a recent survey which had shown that the Republic ranked badly in terms of cost and availability of broadband.

Eircom reacted angrily to the decision last night and told The Irish Times it would appeal the decision to the High Court.

An Eircom spokesman said the decision would force the company to sell access to its network below cost. He said the decision had also been taken with no regulatory impact assessment, something which was mandated this year by the Minister for Communications, Mr Dermot Ahern.

The decision to appeal the decision to the courts marks a change in strategy for the firm, which dropped a number of court challenges to ComReg last year when a new chief executive, Mr Philip Nolan, joined the company