THE Competition Directorate in Brussels is to recommend to the European Commission next week that Telecom Eireann be allowed to keep its monopoly on voice telephony until 2000, instead of 1998 like most other EU countries.
In effect, this means the residential, or domestic users market will be off«MDBO» «MDNM»limits to Telecom's competitors for another four years. However, in return Ireland will be told«MDBO» «MDNM»to open up alternative networks for other, already liberalised services from July 1st next year.
The Government had asked that such networks, which could include networks run by organisations such as the ESB and RTE, not be allowed to compete with Telecom until July 1st, 1999. This means that Telecom's competitors will also be free to carry traffic on these networks.
They will also be free to offer other services, using these networks. Industry sources said the Government fought hard on behalf of Telecom to get this derogation. The recommendation, if upheld by the Commission, will be warmly welcomed by Telecom's competitors as they believe it will greatly reduce the cost of«MDBO» «MDNM»leased lines.
The Commission will also be asked to allow Ireland to direct mobile phone providers to use Telecom lines until January 1st, 1999. The Government had been seeking a derogation until January 1st, 2000. This means that, in 1999, Telecom's mobile rival Esat Digifone will be able to link with other international operators which may offer lower costs.
Fourteen objections to the derogations were lodged by interested parties. Only one, the Irish Congress of Trade Unions, supported granting the derogations.
The main beneficiaries of the changes are likely to be business users. However, under the Telecommunications Bill, which passed all stages in the Dail on Wednesday, Telecom will be forced to reduce to charges by 6 per cent per annum overall, over the next five years.
The Minister for Communications Mr Lowry, has pledged this will not be done at the expense of business users. Meanwhile, the Government has still not formally notified Europe about the proposed strategic alliance with KPN/Telia. The Dutch«MDBO» «MDNM»Swedish consortium is buying 20 per cent of Telecom for £183 million, with an option on a further 15 per cent for £200 million. Although the deal was announced last May, a Department of Transport, Energy and Communications spokesman confirmed the Commission had not been formally notified.
The delay in notification was criticised by Esat Telecom last night. Mr Jarlath Burke said Esat regarded it as "inexplicable that Telecom Eireann should have failed to formally notify the strategic alliance to the Commission under the merger regulations".
He said the Commission was not in a position to take the consequences of the strategic alliance into account when dealing with the Government's derogation application because it did not have access to all the information.
The Department spokesman said the Commission was "fully aware"«MDBO» «MDNM»of the Government's plans regarding the strategic alliance and had been fully briefed on all aspects of it.
