An investment of up to ú500 million in broadband services, which would allow the high speed transmission of voice video and data, is needed if Ireland is to remain competitive, a new report has warned. The report, commissioned on behalf of Forfβs which shapes industrial policy in Ireland, also says telephone charges are still too high compared to other EU countries. And it urges the Government to abandon the EU derogation for telecommunications, which was granted until 2000 and to sell Cablelink immediately. The report, compiled by UK company Analysys Ltd, calls for more powers to be given to the Telecomunications Regulator, Ms Etain Doyle. It also says her office should have responsibility for being more pro-active in encouraging competition as in other countries, rather than just regulating it.

The report warns that unless the required investment is made around 25,000 jobs could be go unrealised in internationally traded services and manufacturing, or 40,000 in the whole economy, by 2010. It also says GDP could be 5 per cent lower by this date and exports could be up to 10 per cent lower, if the issue is not tackled.

The report says that the investment is required in a number of areas. These include about ú50 million in broadband switches in 22 sites, ú150 million in fibre deployment to business and ú300 million in cable and other networks. This is over and above what Telecom and others already invest in telecommunications infrastructure in Ireland, a figure which amounts approximately ú200 million a year, according to Forfβs.

Forfβs chief executive Mr John Travers said yesterday that countries such as Malaysia, and Singapore, are investing heavily in broadband services. He said if Ireland did not invest now it will lose its competitiveness. Broadband was regarded as a fundamental piece of infrastructure in other countries, he said.

The report recommends that 22 switches capable of carrying broadband services should be installed in urban areas around the country. However, it says to encourage investment, financial incentives should be considered. It also recommends the use of EU structural funds to accelerate the required investment in broadband to prevent gaps emerging between the main urban areas and peripheral areas.

Mr Travers said the best way of promoting investment in telecommunications was to ensure that the regulatory framework was pro-competitive. He said the Regulator needed more powers to promote such a framework. "The role of the regulator in the UK is seen as one which is very much part of promoting competition in the sector," he said. "Something similar needs to be done in Ireland."

He said the maximum fine the regulator could impose on a company found in breach of regulations was ú2 million when the net gain to the company could be far higher. He said this needed to be examined and fines commensurate with the transgression imposed.

On the derogation, which means Telecom ╔ireann has a monopoly on switched voice telephony until 2000, Forfβs said it sends very strong negative signals to potential investors, "as well as probably making some broadband investments uneconomic by not allowing infrastructure costs to be shared between broadband and basic voice services."

The report's authors say prices for telephone services in Ireland are still high compared to other countries such as France and Germany where there is a more liberal telecoms market.

The report also says a satisfactory interconnect regime is essential for organisations considering entering the telecoms market. Interconnect is the price Telecom charges other competitors to deliver its calls and has been the subject of an EU hearing between the state operator and Esat Telecom.

The report recommends an early sell-off of Cablelink to a company that would invest significantly in its development to provide broadband services and to compete with other telecoms operators using the Cablelink infrastructure.

Cablelink provides piped television services into around 400,000 homes and its majority shareholder is Telecom ╔ireann. The Government has already signalled its intent to force Telecom to divest its shareholding.