THE Forfas report has called for increased investment in the telecommunications sector and for further price cuts. It also sees a strong case for Telecom Eireann being forced to sell its stake in Cablelink to an independent operator, which could provide increased investment and competition.

Forfas says that a "quantum leap" is needed in the provision of an advanced telecommunications infrastructure, calling for heavy investment in this area. It particularly calls for more spending on a new broadband infrastructure capable of carrying voice, data, images and sound.

"Significant further investment is required to develop the Cablelink network" so it can handle interactive TV and multimedia services, says the report.

Telecom owns 75 per cent of Cablelink, with RTE holding the rest. Forfas sees a "good case" for the sale of the company to an independent network provider, subject to a commitment to further investment.

"However, any decision would need to be taken in the context of the strategic alliance" now being negotiated by Telecom Eireann it says.

The objective for Cablelink should be to create "an advanced communications and services laboratory so that international telecommunications invest and innovate in Dublin."

Cable TV may be the key information infrastructure for small business and homes, it says.

A spokesman for Telecom yesterday agreed that the development of Cablelink was essential. A strategic business review of Cablelink was underway, he said, and would be completed in the next two to three months.

The spokesman said that Telecom had already committed itself to increasing investment from almost £200 million last year to £275 million this year, including investment in broadband technology.

He said the group had set a target of reducing telephone charges towards the lowest quartile iii Europe, as the document recommend, and had already introduced sharp reductions, benefiting business in particular.

Forfas calls for an aggressive approach towards seeking price reductions including the appointment of an independent regulator "and, if necessary, an appropriate price cap" for Telecom prices.

The Minister for Telecommunications, Mr Lowry, has said he intends to appoint an independent regulator by the end of the year.

Forfas says that competition in the telecommunications sector should be introduced as soon as possible. Ireland is seeking a derogation on full competition until the year 2009.

Telecom Eireann should complete its strategic alliance talks as soon as possible, it says, and thereafter full competition is essential. However, both Telecom and the Government have said the derogation is necessary to allow Telecom time to adjust.

"Advanced communications will effectively integrate Ireland for day to day business activities into the major economies of Europe, "the report says.

An essential requirement for Ireland is to have highly competitive telecommunications services and costs, which could produce thousands of jobs.