What's the story with telecoms competition/Conor Pope: There's little that is magic and even less that is smart about the sudden collapse of Smart Telecom's residential phone business which left more than 40,000 subscribers swinging in the wind this month.

The vast majority of Smart's customers had their service summarily suspended after Eircom pulled the plug in a dispute over the company's bill. While Smart was given a reprieve and is still in business, albeit as a considerably more streamlined version of its previous self, the disconnected 40,000 have been left with a major headache.

Following a hastily brokered agreement between Eircom and the communications watchdog ComReg, most of Smart's landline customers were reconnected with a reduced service and given until the middle of this week to find themselves a new provider.

The other providers were quick to take advantage. Within hours of the phone company's troubles reaching the airwaves, Smart's customers were fielding calls from eager salespeople from rival companies offering great deals.

Despite being more expensive than many of those touting for business, Eircom will almost certainly get a significant boost with many deciding that it offers greater security. After all, if a company the size of Smart can find itself in dire straits and overnight leave thousands of customers without any service, the same thing could easily happen to other upstart providers who challenge Eircom's dominance. While Eircom might be thrilled, anyone keen to see the Irish telecoms market opening up will be less upbeat.

Whatever happens to Smart, events over the last few weeks have been very bad news for Irish consumers. The market has lost a residential telephone services provider and competition has been diminished. Noel O'Flynn, the chairman of the Oireachtas Joint Committee on Communications, Marine and Natural Resources said as much last week. The incident would encourage people to stay with the "incumbent operator", he said.

ComReg chairwoman Isolde Goggin told the Oireachtas committee: "The consequences of Eircom's decision to withdraw wholesale services are unacceptable and indicate a requirement to put in place a system to facilitate prior notice in the event of a withdrawal of services." She also stressed that Smart had failed to meet its own obligations and owed Eircom a substantial sum of money.

She told the committee that ComReg was in talks with the Department of Communications about the possibility of including a provision in an upcoming Telecommunications Bill allowing ComReg to ensure customers get 24 hours' notice of a wholesaler cutting off their supplier.

Michael Kilcoyne of the Consumers' Association of Ireland is angry about the situation and believes Irish consumers have been betrayed by the Government in relation to the collapse of Smart's residential business. He has also accused Eircom of bullying tactics aimed at impeding competition.

Kilcoyne told PriceWatch there was a danger that consumers in search of a new provider would be afraid of approaching some of the smaller players even though they offer good value for money. He believes all telecoms providers should now be forced by ComReg to be bonded and there should be agreements in place which would allow people switch back to Eircom, as the dominant player in the market, within 24 hours if there is a repeat of the Smart Telecom debacle.

"In the future, Eircom should be obliged to take these customers back at short notice and provide them with a service until they can find another provider. Eircom has been subsidised up to the hilt by this State for generations, it has been handled with kid gloves for years and still it ends up treating people like lepers," Kilcoyne argues.

These charges of bullying and anti-competitive behaviour are rejected by Eircom. "No one disputes the fact that Smart owed us a significant amount of money," an Eircom spokesman told PriceWatch. "It is also worth noting that ComReg knew about this problem on September 4th."

Comreg denies this and says it was only given three minutes notice.

"We are the ones who put the interim solution in place that allowed Smart's customers to make free emergency, local and national calls," says an Eircom spokeman. "We are underwriting this solution to the tune of a couple of million euro." The spokesman said it was unfair to criticise Eircom if people decided to switch back to it. "When people make choices they have to assess what it is they want. If you are asking Eircom to make guarantees about the bonafides of other companies, we can't do that. We do feel there is competition in the market."

Kilcoyne disagrees and says the Government is to blame for not allowing competition to flourish in the telecoms sector. "There is very little the consumer can do in circumstances like this," he says. "The responsibility rests with the Government. In a tiger economy we should have a tiger government, not a lamb government. When it comes to big business, it just rolls over."

People searching for a new phone company this week would do well to visit the new ComReg-backed website which has a useful calculator to help people work out which of the 29 companies currently providing landlines offer the best deals. The site, www.callcosts.ie, allows users to compare the costs of landline, broadband and mobile services as well as combined packages based on specific usage.

Using the calculator, PriceWatch entered a number of different options. Based on 100 minutes a month each of local, national and mobile calls but no international calls, Swiftcall comes out on top for a landline-only service. While most of Eircom's offerings are at the bottom of the list, one - Eircom Mobile - is among the cheapest. Once international calls are added to the equation, 50 minutes each to Australia, France and the UK, Eircom disappears from the top half of the list while Swiftcall remains on top.

Another option facing consumers is to dispense with their landline in favour of mobiles. One Smart customer who spoke to PriceWatch intends to do just that. "The only reason I had a landline was for internet access. I never used it for phonecalls. Smart's demise has given me the chance to re-examine what I need and I am now looking at the wireless options available for broadband," he says.

Smart Telecom still offers one of the cheapest and best broadband packages on the market. Under the deal reached between it and Eircom, it has cleared its debts and has a new contract covering its 17,000 broadband customers.

Smart's biggest hope for long-term survival is the pending High Court judgment in its action against ComReg over the loss of its third-generation (3G) licence. Last November the regulator offered Smart a 3G licence but withdrew the offer in February in a row over financial guarantees that Smart was to provide as a condition of getting the licence.

Smart has challenged the decision and insists it gave ComReg the bonds that it sought. The case was heard by the High Court's commercial division in July and a verdict is expected soon. Of course, even if the judgment goes Smart's way, it will still have to find hundreds of millions of euro to fund a 3G service and in the current climate that will not be easy.