THE cost of most telephone services are to be capped for a five-year period under a new order made by the Minister for Transport, Energy and Communications.
Mr Dukes predicted last night the cap would cut overall prices for telecommunications services by almost one-third in five years. Most of the savings would be made by business customers, for whom the price reductions would result in improved competitiveness, the Minister said.
The order is the first to be made under the Telecommunications (Miscellaneous Provisions) Act 1996. It covers telecommunications services provided by Telecom Eireann for which there is no competition or for which Telecom holds a dominant position.
"The order provides for a new framework for future charges in Telecom Eireann's telecommunications tariffs. It will result in price cuts worth tens of millions of pounds to all telecommunications customers. Over the five-year period of the price cap overall prices will fall by almost one-third," he said.
Within the overall cap, Telecom would have "flexibility" to adjust tariffs, according to the Minister. However, individual telecommunications charges cannot increase by more than 3.7 per cent in 1997. Thereafter, the price cap will apply on an annual basis.
According to Mr Dukes, the order will bring about an overall reduction in tariffs in 1997 of 4.3 per cent in nominal terms and 6 per cent when inflation is taken into account.
The order can be reviewed by the director of the independent regulator for the telecommunications sector, acting on the direction of the Minister, in two years' time, or after the five-year period.