Cable firm NTL will announce a €100 million plan today to supply broadband to homes in Dublin, Waterford and Galway. The move could affect Eircom and ultimately lead to cheaper prices for services such as TV and internet for consumers.

NTL plans to upgrade its existing cable network to enable it to supply high-speed internet and digital TV to homes and businesses. Its decision to restart the upgrade of its cable network could affect Eircom which is relying on broadband to drive its growth.

But if NTL is successful in introducing broadband products it should vastly increase competition for broadband services and reduce prices for consumers.

The cable firm planned to upgrade its cable network in 2000, but later halted the upgrade when it ran into financial difficulty. But it is understood that NTL has now decided to make the investment because its financial position has improved since it emerged from Chapter 11 bankruptcy protection.

NTL, which has about 340,000 customers in Dublin, Galway and Waterford, will begin work on the network upgrade immediately, although it will take up to three years to complete the work.

The firm plans to offer a suite of business and consumer broadband packages, at least some of which will be faster than Eircom's broadband product, i-stream. The broadband product is expected to be competitively priced and will compete head-to-head against digital subscriber line technology offered by Eircom and other telecoms firms.

Earlier this week Eircom said it had about 50,000 broadband users and it plans to capture 100,000 customers before the end of the year. In comparison, NTL has just 3,500 broadband customers in Dublin because it stopped upgrading its network.

NTL's decision to invest in its network is good news for the Minister for Communications, Mr Ahern, who has promised to transform Ireland from a broadband laggard into a broadband leader.

The Republic has suffered from slow investment in broadband services, at least in part because Chorus and NTL had failed to upgrade their networks.

Several international surveys have ranked the Republic at the bottom of the EU league table in terms of the number of broadband subscribers. But recently the pace of investment has increased as Eircom and other fixed-line firms cut the price of broadband in Ireland.

NTL's decision to offer broadband is also driven by its need to increase turnover. Last month it said it had generated sales of £17.5 million in the first quarter, exactly the same amount as in the same period last year.