Eircom could face fines of almost £200 million (€254 million) should it break the terms of its telecoms licence or fail to comply with a new three-person commission for communications regulation proposed by the Minister for Public Enterprise.

Outline legislative proposals published by the Department of Public Enterprise yesterday recommend increasing penalties against telecoms operators for indictable offences up to 10 per cent of their annual revenue.

This would make Eircom, which reported revenue of £1.955 billion in 1999, liable to a maximum fine of almost £200 million. Smaller operators could face a maximum fine of £500,000, if this figure exceeded 10 per cent of their revenues. The new penalties are being proposed to give teeth to a regulatory regime which has not pursued a summary or indictable conviction against a telecoms operator since its establishment.

Under current legislation the maximum fine which can be imposed against telecoms operators on indictment is £50,000.

Telecoms regulator Ms Etain Doyle has stated publicly that the current penalties are inadequate and has lobbied hard for the increase. But she will not favour the proposal to increase penalties on an indictment rather than a summary basis. An industry source said that pursuing cases on indictment was time consuming and required the support of the Director of Public Prosecutions.

An Eircom spokeswoman said last night the firm was reviewing the proposals and could not comment until the consultation period ended.

The consultation is scheduled to run until September 29th, after which time the Minister for Public Enterprise, Ms O'Rourke, will finalise proposals and seek Government approval for the Bill.

As expected, the outline legislation includes proposals to replace the telecoms regulator with a three-person commission accountable to the Oireachtas.

Ms O'Rourke has also followed through on a previous public commitment to include specific powers within domestic legislation to unbundle the local loop - the link from the nearest exchange to the individual user.

A draft European Commission regulation published in July set out that competing operators must be allowed full access to incumbent operators' local networks by January 2001. If this were approved by the Commission later this year it would take direct effect in Irish law.

But the outline proposals suggest that local-loop unbundling should be specifically included in the Communications Bill in case their is a delay in the adoption of the draft regulation.