Eircom has been told that it must continue to provide telephone services for all homes and businesses in the State, despite its desire to step back from the obligation because of costs.
The Commission for Communications Regulation (ComReg) said yesterday that Eircom would be re-designated as the Republic's universal service provider (USP) under forthcoming EU legislation.
Universal service requires that all citizens can expect to be provided with a basic set of high-quality telecommunications services at an affordable price, regardless of where they live. Eircom has said that the obligation costs about €40 million each year.
The company has been chosen as USP because of its "market share, its network presence throughout the country and its considerable experience and ability in providing universal service", the regulator said in a statement.
A spokeswoman for Eircom, which was taken private last year, said the company was "extremely disappointed" with ComReg's conclusion.
"While we agree with the principle of universal service obligations, all the other telecoms operators should pay their share. It's extremely unfair," she said.
The spokeswoman declined to comment on how Eircom would proceed on the matter.
The company contends that it should not be the sole USP when it only generates 38 per cent of the Republic's telecoms revenues. The remainder comes from mobile phone companies and alternative fixed-line providers.
ComReg said yesterday that it had considered the possibility of a mobile operator becoming the USP, but this had proved to be unfeasible for affordability and technical reasons.
Mr Iarla Flynn, chairman of the Association of Licensed Telecoms Operators (ALTO), which represents telecoms companies other than Eircom, yesterday welcomed the ComReg decision but said it illustrated the need for more competition in the Irish market.
"Realistically, Eircom is the only operator that can do this. It underlines the very dominant position of Eircom in the fixed-line market," Mr Flynn said, adding that the company would benefit in the long term from the obligation because of the brand penetration it entailed.
As well as providing telephone lines across the State, the USP designation will require Eircom to draw up a customer charter on all services falling under its remit, including the provision of pay phones, phone books and services for disabled users.
The customer charter governing the obligations will be drawn up in consultation with ComReg.
The regulator's next move will be to gain the consent of the Minister for Communications, the Marine and Natural Resources, Mr Ahern, on the operation of the universal service obligations. Eircom will be formally designated as the USP before the end of the year.
Meanwhile, it was confirmed yesterday that the Government is considering asking Eircom and fellow telecoms companies to fund the provision of broadband connectivity to schools, libraries and community training centres.
Mr Ahern said that broadband links could be provided for all schools for less than €30 million each year, adding that his officials would be in contact with the telecommunications sector on the matter.
"The sector are aware of my plans and have expressed their misgivings but I firmly believe that the telcos will benefit in the long term because it will stimulate the development of broadband applications," Mr Ahern said as he addressed a group in Tallinn, Estonia.
