Eircom's rivals yesterday accused the company of using predatory pricing to keep them out of the broadband market, as the telecom group and its biggest competitor unveiled cuts in the retail cost of the high-speed service.

Eircom's retail arm announced a promotional package worth more than €200 to consumers and business. The deal includes a free connection, modem and one month's free rent to customers signing up between October and January 6th.

It had already confirmed to The Irish Times that it planned to cut the wholesale broadband connection fee from €150 to €20 during the same period.

Its biggest competitor, Esat BT, responded by announcing a similar deal, also valued at around €200 when the €20 cost of the connection is included. The promotions are available to customers signing up for a year.

But the Alternative Licensed Telecommunications Operators (ALTO) group, which represents Eircom's competitors, accused it of using its muscle as the wholesale supplier of broadband lines to squeeze margins and make it difficult for competitors to enter the high-speed market.

ALTO spokesman Mr Iarla Flynn argued that Eircom was effectively giving itself a more generous discount than that being offered to its competitors. "The value of their package is €200, but what they are offering to wholesale customers is a reduction of €130," he said.

Mr David Long of telecoms consumer group Ireland Off-line, warned there was a danger that Eircom was trying to squeeze margins in an effort to make broadband less profitable for its competitors, something that communications regulator ComReg has ruled to be illegal.

Both he and Mr Flynn called on Eircom to cut its monthly wholesale broadband line rental charge of €27. Mr Long said BT had cut this to £11 (€15.6) in the UK.

Eircom's commercial director, Mr David McRedmond, last night reacted to their comments saying that ComReg had approved its retail discounts. "Everybody knows ComReg is pretty tough on Eircom, and they looked very closely for margin-squeezing and did not find any evidence of it," he said.

A ComReg spokesman confirmed that the regulator had approved Eircom's promotion. He pointed out that the company was limited to offering it over three months. "Competitive offers have been available for some time [to new broadband subscribers] but it's clear that previous offers were insufficient to attract consumers in reasonable numbers," he said.

"This should stimulate demand and we hope that Eircom will see the need to reduce prices in the longer term."

Eircom cut the wholesale connection rate as part of its stated target of getting 100,000 subscribers signed up to the broadband services offered by both itself and its competitors by the end of 2005.

Some industry sources suggested yesterday that the company was keen to drive up broadband numbers as the growth in flat-rate internet services would erode its ability to grow revenues from existing fixed-line data services.