Eircom will face a major challenge in coming weeks as NTL and Irish Multichannel launch residential telephony services as part of a bundle of services delivered over upgraded cable and satellite systems.
Two years since the introduction of competition Eircom retains up to 90 per cent market share in the residential telephony market and the Republic lags in 15th place out of 19 OECD countries in terms of the price of national calls. But the entry of operators offering telephone services without utilising the local loop, which Eircom controls, is likely to shake up the market and bring down call costs.
"The key difference between ourselves and Ocean or Esat is that we will be able to use our own infrastructure direct into a customer's home," said Mr Brian Moore, marketing manager at NTL.
In the next few weeks NTL will offer more than 10,000 customers telephony services over its upgraded digital broadband network while its remaining 390,000 customers will be offered a telephone service via carrier pre select.
This technology, used by rival telecoms operator to interconnect with the Eircom network, is expected to be used until the broadband network is upgraded over a three-year period in much of Dublin, Galway and Waterford.
Irish Multichannel is due to launch its basic package which will include Internet services, up to 20 TV channels and a telephony service in the next few weeks.
Its upgraded digital services will be available to customers first in Cork, North Tipperary and Louth via cable and the microwave system - multichannel multipoint distribution service. They will later be rolled out across the Republic.
"The basic package will be under £20 which is very competitive when you consider line rental for an Eircom telephone, according to Mr Willie Fagan, managing director of Irish Multichannel.
The company is investing some £50 million in set top boxes which it will distribute free to customers as an incentive to sign up to their digital package. NTL remains tight lipped on the exact breakdown of its package but it is considered unlikely that it would charge customers to switch to digital.
Irish Multichannel, along with Formus Communications, Esat and Eircom, has also secured a licence to provide telephony via wireless local loop technology as a means of bypassing the fixed local loop network. This technology may be particularly attractive in rural areas where few operators roll out networks.
To compound the pressure on Eircom there are also signs that telecoms companies such as Spirit, which claims to have 79,000 customers, and Esat Telecom could soon make more headway in the residential sector.
Telecoms operators have blamed the lack of access to the last mile of the local Eircom network for their poor showing in the residential sector. But this may soon change as the European Commission has signalled that rival operators should gain full access to the incumbent operator's local networks by January 1st next. A regulation to enforce this in all EU countries may be passed this autumn.
The technology which enables operators to compete with Eircom, carrier pre select, enables Eircom to retain the line rental and billing process for rival operators customers. Customers can find this confusing and it has led to protests that Eircom was using information from the bills of its rival's customers to target sales.
The regulator has already ruled that operators can gain a form of bitstream access to Eircom's local network from next April. But a ruling to allow full access to the local loop would enable greater competition.
To meet increased competition, Eircom has reduced the cost of residential calls in recent months by introducing individually tailored discount packages for customers through the Options 15/30/50 packages.
The group will also look to take on NTL and Irish Multichannel in the provision of Internet, video on demand and data services through a ADSL technology - which enhances the copper telephone wire to enable it to carry broadband capacity.
