Eircom has asked the High Court to continue a stay on implementation of a directive which could cost the company £15 million in fines and bring into question the viability of its leased lines business.

The Office of the Director of Telecommunications Regulation is opposing the application and has urged the court to either discontinue the stay or require Eircom to give an undertaking to pay damages incurred by the regulator as a result of the stay.

Esat Telecom, Ocean Communications and Esat Net also want the stay discharged and an undertaking that Eircom will pay any damages incurred by them arising from the delayed implementation of the directive.

On September 7th, Eircom secured leave from the High Court to challenge a directive of the regulator, dated August 28th, 2000, setting out a new penalty regime for Eircom's failure to meet deadlines in providing leased lines to other telecommunications service providers. The company also secured a stay on the coming into effect of the directive until the full hearing of the judicial review. However, the regulator brought a motion to set aside the stay. Mr Paul Gallagher SC, for Eircom, outlined the background to the matter. Eircom had a 15-year licence, granted by the regulator in April 1998, to provide telecommunications services. Because Eircom was designated as having significant market power, its licence included obligations not applicable to other telecommunications service providers - including opening up its infrastructure to other licensed operators, such as leased lines. The regulator was also given the right to approve customer contracts, which stipulated the timeframe within which leased lines had to be provided, and allowed to impose penalties if those were not met.

Eircom's complaint was the regulator had purported to exercise a power to review earlier decisions regarding service level agreements and had, on August 28th, issued a further directive regarding penalties for Eircom's failure to meet deadlines in supplying leased lines to other operators. This removed the cap on penalties and altered the method of calculating penalties.

While the new method could lead to less penalties in some instances, Eircom was concerned the removal of the cap had exposed the company to "a wholly disproportionate penalty" for delays in supplying leased lines. While Eircom accepted there were delays, it contended these were largely beyond its control. The August directive was issued in the absence of any consultation process and without Eircom having any opportunity to make submissions or representations in that regard, Mr Gallagher contended.

In the main action, Eircom is challenging the procedures leading to the issuing of the directive and will also be challenging the power to impose a disproportionate penalty of the kind imposed. The hearing continues before Mr Justice Kelly today.