Eircom:Eircom has threatened to take "action" over the Government's development of regional broadband investments, according to a document prepared by senior civil servants in the Department of Communications.

The threat from the former State-owned telecoms firm relates to the Metropolitan Area Networks (MANs), which are being rolled out in towns around the country.

"Eircom have also threatened action in relation to phase II of the MANs programme," the document states in a section entitled "Key immediate/priority issues".

A department spokeswoman confirmed that Eircom had "hinted" at legal action over the Government's intervention in the market.

The State has spent €85 million building fibre-optic networks in 27 towns around the Republic in phase one of the MANs programme. Some €118 million has been earmarked for the second phase of the scheme, which will cover 90 additional regional towns.

An Eircom spokesman would not confirm or deny that Eircom is considering legal action over the development of the MANs.

"Eircom has always said that the MANs are duplication and the company would have concerns over their development," he said. "We are keen to make sure the MANs do not provide any inappropriate State subsidy of the wholesale telecoms market."

The department spokeswoman said it "fundamentally disagrees" with Eircom's assessment and that this position was supported by the European Commission. In March 2006, following a nine-month investigation, the commission approved €170 million in funding for the second phase of the project.

In their brief, the senior civil servants told the Minister for Communications, Éamon Ryan, that the construction of the MANs was necessary to address "market failure".

The document also reveals that there may be a third phase of the MANs project.

This would cover "a further 30 large towns [ that] were not included in previous phases". The Department said a value-for-money analysis of phase one of the MANs may influence any decision.