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Eircom slashes wholesale and retail prices

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Eircom is cutting the price of its wholesale broadband product along with a corresponding cut for its entry-level retail offering.

The former state telecoms operator sells wholesale DSL access to other broadband providers. The price which it charges will now be reduced 15 per cent from €27 per month to €23 per month, which should allow other operators to pass on price cuts to customers.

In addition, Eircom is to introduce an entry-level broadband product priced at €39.99 (VAT inc.) per month from 1 March 2004. Entry level pricing was previously&euro 54.45 per month. According to Eircom, the price cut will make Irish prices equivalent with those in the UK and will make Ireland the fifth cheapest market in Europe for a comparable product.

The cuts are subject to regulatory approval. Eircom says that it will submit proposals to ComReg for the introduction of the new prices.

The company attracted criticism on its pricing when it first introduced DSL to Ireland, but it now seems to accept that dropping prices is the key to gaining customers. David McRedmond, commercial director at Eircom, said today's announcement is about Eircom "continuing to lead the drive for broadband take up in Ireland. The demand for broadband trebled when we reduced prices last year and demand trebled again when we introduced our promotion in October of last year."

McRedmond said the firm has set a target of 100,000 broadband users by the end of 2004. With approximately 34,000 broadband customers in the country today, the company is still on track to reach this target, he thinks. Ireland should reach the average EU broadband penetration rate of 6-7 per cent by the end of the year, he forecasts.

Eircom's announcement comes in the wake of several significant moves in the Irish broadband market. In December, Communications Minister Dermot Ahern announced a €140 million regional broadband plan that covers more than 80 smaller towns in the State, with populations ranging from 1,500 and upwards. Several days later Eircom responded with a plan of its own. It revealed a major expansion of its broadband programme and said that almost every town in Ireland will be able to avail of it by March 2005. The company said that the initiative would "mirror and go beyond" that of the government, with all of the towns covered by the government's scheme included, in addition to a large number of other towns.

A spokesperson for Eircom said the new announcement is not a direct response to the government's initiative: it should be seen as a move to further stimulate demand.

"We welcome any initiative to increase the availability of broadband in Ireland. However, what we don't agree with is duplication of infrastructure and we feel the government should be working closely with telecoms operators to provide broadband to rural communities," the spokesperson said. ®

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