Eircom has welcomed a set of new service level agreements modifying the penalty provisions imposed on the company for failing to deliver leased lines and circuits to rival operators on time.

The company yesterday also settled court proceedings it had issued against the telecoms regulator, Ms Etain Doyle, following her decision to introduce an uncapped penalty regime in August.

The new agreements were issued by the regulator last week after a consultation process involving Eircom and other licensed telecom operators in the Republic.

The agreements retain the uncapped penalty regime introduced by the regulator but are more gradual in their application.

Rather than imposing a fine on Eircom after it has missed a delivery date by 10 days, the new service level agreements will impose penalties after 26-30 days, depending on the circuit.

The penalties for late delivery are unlikely to approach the high levels possible under the regulator's previous proposal.

Following the regulator's decision in August, Eircom argued the agreements could cost the company £15 million (€19 million) in fines and bring into question the viability of its leased lines business. It asked the High Court to continue a stay on implementation of the regulator's directive.

Other licensed telecoms operators have consistently complained about Eircom's inability to meet their demands for circuits on time. This had led Esat Telecom to join the court case taken against the regulator.

The company welcomed the agreements yesterday along with Eircom. Mr Richard Cooke, chief executive of Esat Business, said the decision would enable Esat to improve services to its customers.