Business Opinion:It's getting on for eight months since Babcock & Brown acquired that most important of assets, the national phone network.

It would be tempting to say that as of last Friday all the public has seen since then is an application for a subsidy to help it meet its obligation to provide everybody who wants one with a phone and the prospect of a price rise.

That would probably be unfair.

But it is fair to ask when we might see some deeds to match the fine words of the company's smooth-talking chairman Pierre Danon.

Within days of taking over, Danon was promising a fresh start and pledged his tenure at the company would be marked by higher investment, more broadband and the holy grail of unbundling the local loop. He also held out the prospect of a far more collaborative approach being adopted, both with the regulator and also the Government on broadband.

Eircom can of course argue that its investment plans - €1 billion committed between now and 2009 - represents a very significant increase in investment. Broadband coverage is improving as it is taken up, while talks on the very complex issue of unbundling - allowing other companies access to the telephone lines into customers' homes - are ongoing.

The issue, however, is that there is no real sense, at the level of customers anyway, that much has changed. Indeed the departure of Smart from the residential scene - with some help from Eircom - actually creates a sense that things have got worse.

Eircom may argue that it needs more time and the good times are still around the corner, but patience appears to be running out in Government circles.

The publication last Friday of the much heralded Communications Regulation (Amendment) Bill is intended amongst other things to send a signal to Eircom's new owner to start delivering on its promises. It gives the Commission for Communications Regulation (ComReg) increased enforcement and investigative powers in order to facilitate increased competition.

"ComReg will now be able to aggressively investigate and take swift action where there has been an abuse of a dominant position," according to Communications Minister Noel Dempsey. No prizes for guessing who Dempsey is referring to and he no doubt is hoping that the mere threat of these powers will have the same effect here as they did on one of Danon's previous employers, BT, in the UK.

Eircom must also have noted the very large chunk of cash set aside in the new National Development Plan for investment in State-owned broadband infrastructure. The company is highly critical of the current Government policy of building networks in regional towns as a way of hurrying up broadband penetration. It quite rightly points out that it is illogical to build two competing networks in an area the size of the Republic, but at the same time it has failed to serve these areas adequately.

Quite where all this is heading is hard to predict, but there seems to be growing enthusiasm in some circles for the various players, Eircom, the Government and the other phone companies to pool their assets and invest to build a next generation network, with exploratory discussions led by Dempsey set to start later this month.

The concept seems to chime nicely with Babcock & Brown's stated plan to split Eircom into a network business and a services business. The network business would provide a suitable long-term investment for its infrastructure funds, while the services business could be floated or sold.

It is obvious that a significant chunk in a new network company would provide an equally, if not more attractive investment for Babcock.

It seems a simple solution, but as ever the devil is in the detail. Splitting Eircom is by no means a straightforward job. The venture capital funds that took the company private in 2000 looked at doing something similar and decided it was far to expensive. But, they had easier ways of making a return thanks to the company's pristine balance sheet.

And even if the logistical issues can be surmounted, it is not altogether certain that a deal could be done which would be to everybody's satisfaction. Babcock & Brown can be expected to drive a hard bargain given the pressure it is under to make the sort of returns expected of private equity funds.

To a certain extent the horse trading has started with Eircom expressing a willingness to look at the sort of national network structure being proposed, but at the same time saying it is quite happy to keep going as an integrated business.

By granting ComReg new powers and indicating a willingness to throw more State money at building a rival network, Dempsey is presumably making sure he has a few cards to play when it comes to the crunch.