A new telephone company, Interoute Ireland, will today enter the Republic's telephone market, claiming it will undercut rivals to offer domestic users cheaper prices for all except off-peak local calls. The company also plans to create a seamless service accessible by freephone across 11 EU countries, with a "national European rate" by next Easter.
Interoute, a private company 78 per cent of which is owned by the Sandoz family, said it would spend £120 million (€152 million) building a fibre-optic network in Ireland, with cables between Dublin and Belfast, Athlone, Sligo, Galway, Limerick, Portlaoise, Cork and Waterford, as well as two undersea links between Dublin and Holyhead, and Belfast and Scotland.
The company also said it would share with technology giant Alcatel the €1.5 billion cost of a fibre-optic network across Europe. By October, Interoute said, customers in Ireland, Britain, France, Italy, Germany, Spain, the Netherlands, Denmark, Portugal, Belgium and Switzerland would be able to make calls at no extra charge using a freephone number anywhere in any one of these countries.
Interoute said it was offering domestic users in the Republic calls at lower rates than rivals Telecom Eireann, Esat or Ocean. Customers will be supplied with a small router box, about the size of a bar of soap, which they can plug into their domestic phone line. This sends all calls through Interoute's network.
"It is expected that Interoute's attack on over-pricing will begin a vicious price war in an effort to win the loyalty of the Irish home phone user," the firm said.
Unlike other companies, which require new domestic users to be already paying a certain amount each month in their Telecom Eireann bills, Interoute said it would have no lower limit for new customers.
"As far as we are concerned, that is discriminatory pricing - we do not want to cherry pick like that," said Mr David Ryan, the company's chairman and chief executive.
"Customers have clearly not benefited from deregulation thus far, and we finally want to finally bring the real benefits of deregulation into people's homes," Mr Ryan added.
He said Interoute would charge domestic customers 5p a minute for local and national calls during peak hours, and 22p a minute for calling mobile numbers. Calls to Britain would cost 9.5p a minute; to the US and Canada 12p; to France, Italy and Spain 12p; and to Australia and New Zealand 19p.
The company admitted that for off-peak local calls, Telecom Eireann remained cheaper, but suggested that the telecommunications regulator, Ms Etain Doyle, may soon force the former State monopoly to offer a wholesale rate to other phone companies which reflected this price.
Mr Ryan said Interoute was aiming at a 3 to 6 per cent share of the market - between 30,000 and 60,000 people - within the first 12 months. The company was "forward pricing", he added, meaning it was selling calls below what it normally would in order to build up its customer base.
The company already sells prepaid cards under the Spirit brand; Mr Ryan said the cards were generating more than 1.5 million minutes of calls each month, but would not convert this figure into revenue.
