The office which regulates the telecoms industry could lose at least half its staff, following proposals to put employees on five-year contracts. Many of the staff have specialist knowledge and cannot be replaced easily.

If a significant number leave, it could have serious implications for the pace of liberalisation of the telecoms market which is due to be completed by December.

It is understood the regulator for the telecommunications industry, Ms Etain Doyle, has mooted five-year contracts as part of a move to break with the civil service. Her office, known as the Office of the Director of Telecommunications Regulation (ODTR), was established a year ago to regulate the industry.

Around 50 staff transferred from the telecommunications section of the former Department of Transport, Energy and Communications, now known as the Department of Public Enterprise. Ms Doyle broached the subject of five-year contracts recently, but it is understood many staff will resist it.

It is also understood Ms Doyle has hired Mr Jack Russell, former head of personnel at An Post, on a temporary basis to help with the restructuring of her office. Any alterations in staff conditions will not be straightforward because changes will have to be negotiated with the trade unions, the ODTR and the Department of Public Enterprise.

Mr Shay Cody, deputy general secretary IMPACT, confirmed there had been a meeting with staff about five-year contracts. Mr Cody said it was inevitable the ODTR would have some staff on fixed-term contracts. However, he felt a significant number of staff, who currently enjoy civil service status, would probably opt to return to the civil service.

IMPACT represents around two dozen staff at the ODTR, mostly technical and engineering grades.

Mr Derek Mullen, assistant general secretary with responsibility for telecoms workers in the Civil and Public Servants Union (CPSU), said concern had arisen because of uncertainty about the future in the absence of any detailed proposals.

He said at present most of his members - approximately 15 of the staff are represented by the CPSU - appear to want to return to the civil service.

The Public Service Executive Union's (PSEU) assistant general secretary, Mr Billy Hannigan, predicted the regulator would have some difficulty moving staff to five-year contracts. The PSEU represents about 10 staff at the regulator's office.

Mr Hannigan said PSEU staff were on general services grades and he could not see them giving up their civil service pay and conditions. Like others, he expects it will be at least a month before firm proposals are made.

It is also understood that many staff believe their careers would be better served in the civil service, where a wider range of opportunities exist, as opposed to a small specialist office.

Some staff are said not to be opposed to contracts as it might give the regulator greater flexibility to offer improved terms. Sources said the final make-up of the group which accept new terms will be crucial as a proper mix of skills and knowledge will be necessary if the office is to function properly.

Although the office is funded by the industry - those involved in the cable and telecommunications sector - Ms Doyle had to seek approval from the Government for the posts.

It is understood that several staff have requested transfers since the ODTR was set up and that employees have been working extremely long hours. However, morale is said to have improved in recent weeks.