Smart Telecom says Eircom curbs cost it €47m per year

Smart Telecom is claiming restrictions imposed by Eircom on its broadband service are costing the company some €47 million a year, the High Court heard yesterday.

The President of the High Court, Mr Justice Joseph Finnegan, was also told that Eircom had served a notice of termination on Smart, effective from Friday next, regarding provision by Eircom to Smart of interconnector services.

However, after exchanges between counsel yesterday, Mr Maurice Collins SC, for Eircom, said his client would continue to provide such services pending the outcome of a court hearing set for October 13th.

Earlier this year, Smart brought an application for an injunction directing Eircom to remove restrictions on its broadband service which, Smart claims, are causing it commercial damage. The matter has been before the court on a number of occasions and directions were issued in relation to the exchange of legal documents.

When the case was mentioned yesterday, Denis McDonald SC, for Smart, said Eircom had now served notice of its intention to terminate from Friday next the interconnecting agreement between the parties. In those circumstances, his client wished to proceed before Friday with its application for an interlocutory injunction against Eircom.

Mr McDonald said Eircom had previously agreed before the court to continue to provide the interconnecting services on the basis that Smart would make payments on time. He said there had been some small delays in making payments and one more significant delay, which was due to "a mistake", but all payments had been made. Despite this, Eircom contended it was entitled to terminate the agreement because Smart posed a "credit risk". His client denied such claims.

Mr Collins, for Eircom, said there had been a delay of 96 days in making one payment and lesser delays regarding other payments. Smart had argued this was normal commercial practise but his client rejected that claim and argued there was "a pattern of default". Smart had also failed to properly particularise its claim against Eircom despite contending it was entitled to damages of €47 million per year.

In light of the matter coming before the court on October 13th, Eircom would undertake not to terminate the interconnector services prior to the outcome of that court hearing, counsel said.

Mr McDonald said there was no basis for the claim that Smart was a credit risk and contended Eircom itself was consistently late in making payments to its creditors, by an average of some 26 days. Payments were made by Smart within less time than that. Counsel also said Eircom was well aware of the case being made by Smart in the proceedings but Smart would nonetheless provide the particulars sought by tomorrow .

Mr Justice Finnegan said the various matters in dispute between the sides would be heard before a judge on October 13th.

These include Smart's application for an injunction restraining the alleged restrictions on its broadband services, which injunction would apply pending the outcome of the full hearing of proceedings brought under the Competition Act 2002 in which Smart alleges Eircom is abusing its dominant position in the broadband market.

Smart claims the alleged restrictions on Eircom's broadband service include a notice of termination initially served on Smart by Eircom on May 20th last.