The European Commission has rejected a proposal from Eircom that would have prevented the communication's regulator from opening its local telecoms network to competition.

The ruling paves the way for the Commission for Communications Regulation (ComReg) to set a new price for rivals to use Eircom's network and implement strict regulation on the firm.

A decision published yesterday by ComReg shows Eircom lobbied against regulation on the basis that the State's strategy to build new fibre networks in the regions was hurting its business.

Eircom argued that the Government's decision to build fibre rings around 18 towns in regional areas was having a significant impact on the economics of its local access network - the copper wire that runs into every home and business in the State.

The firm said this could lead to "stranded" telecoms assets - assets of no value to the company - as the Government duplicates Eircom's network. The consequences of the Government's re-entry into the telecoms infrastructure supply market need to be considered by the regulator, it argued.

Eircom also said that "local loop unbundling" - the name given to the process of opening its access network to competition - would not work in Ireland.

It is costly to implement; has no significant impact on liberalisation; does not work because of the economies of scale of the Irish access network; and should not be mandated in Ireland, according to a summary of Eircom's objections to the decision.

ComReg ruled yesterday it did not consider Eircom's submission to be relevant as the new State networks do not relate to Eircom's local access network.

In a decision notice, ComReg said it had found Eircom to be dominant in the local access market and said it would impose certain regulations on the firm.

These are: price control, access obligations, non-discrimination, transparency, accounting separation, price control and cost-accounting obligations. But crucially, the ruling by the Commission should help ComReg to introduce a new wholesale price for "unbundling" next month.

A previous wholesale price set by the regulator was appealed to the High Court by Eircom, severely delaying "unbundling".

ComReg hopes that, by using its new powers to reduce the cost of accessing Eircom's network, rival firms will build their own broadband infrastructure rather than relying purely on Eircom's wholesale internet service. Until now, only Esat BT has gained access to Eircom's local network.

Meanwhile, ComReg has called for Eircom's chief financial officer, Mr Peter Lynch, to sign off on important data supplied to the office on fees levied on other operators to terminate and originate calls on Eircom's network.