EIRCOM customers can expect annual reductions in call charges of 8 per cent in real terms each year for the next three years. The Director of Telecommunications Regulation, Ms Etain Doyle, has signed an order amending the price cap on Eircom from its current stipulation of annual price reductions of 6 per cent to a new 8 per cent, minus the annual inflation figure each year.

The order comes into force from January 1st and will apply to the overall cost of a basket of telecommunications services including local and trunk (inland) calls, operator-assisted calls, rental and connection charges for telephone lines, ISDN connections, operator services and calls from payphones. For example, if the inflation rate next year is 3 per cent, then Eircom will be obliged to reduce its basket of charges by 5 per cent compared to the 1999 level - adding up to 8 per cent in real terms.

The prices of any one of these services may not increase by more than per cent plus inflation annually, except for directory enquiries which can be adjusted freely within the overall reduction requirement.

International calls have not been included in the price cap because the office of the Director of Telecommunications Regulation believes competition is developing more quickly in this market.

Residential users and small businesses will probably benefit most from the changes. Ms Doyle said the price cap was designed because competition was still very much in the "early stages" in the Irish market.

"Until that develops, this price cap is designed to ensure that the consumers who do not have the bargaining power of big businesses, can share more effectively in the benefits that competition is bringing," Ms Doyle said.

The price cap was originally proposed last October. The proposals were then reviewed by the regulator's office in consultation with the telecommunications sector, and from regulatory accounts produced by Eircom.

The regulator's office said yesterday certain specific safeguards had been included in the cap to ensure affordability was maintained, particularly for users in "rural and high-cost areas and members of vulnerable groups".

An Eircom spokesman said yesterday: "This move is totally consistent with reductions we have been implementing ourselves for the past three years. It's fully factored into our business plan for next year, and I think it's a sensible and competitive price cap that will ensure further significant cuts over the next three years."

The document ODTR 99/78 - "Telecommunications Tariff Regulation (Modification) Order, 1999. Price cap on certain services provided by Eircom" - is available in the documents section of the ODTR website (www.odtr.ie).