The development of nationwide competition among Internet service providers (ISPs) is being hampered by new charges introduced by Telecom Eireann as part of its recently announced plans to provide cheaper access for dial-up customers, according to smaller ISPs.

Both Limerick-based elive and Dublin-based Connect Ireland say Telecom's plans to charge £1,000 for special lower-cost Internet numbers at each new point-of-presence (POP) from October 1st inhibits expansion. They say the new charge favours existing national ISPs, two of which are owned by Telecom Eireann, which were provided with the new numbers free of charge.

Before the numbers were introduced each new POP involved a new local number, allowing users in that area to dial the Internet at local-call rates. The new Internet access numbers, beginning with 1891 prefixes, allow five minutes per unit on peak-rate local calls instead of the usual three, but only if the ISP has a POP in the caller's local area.

So far only three ISPs, Telecom Eireann's Tinet and Indigo, and PostGem's Ireland On-Line have countrywide or near countrywide local-call access.

Telecom Eireann says the impending £1,000 charge reflects the cost of the work involved. Since the 1891 numbers are not part of its "intelligent networking", changes must be made at each exchange representing a POP.

Mr Seanie Ryan, owner of elive, said he was initially asked to pay £1,000 to use a new lower-cost number at his existing POP in Limerick, but following representations made to Telecom Eireann by Minister of State and local Fianna Fail TD Mr Willie O'Dea, he was offered usage of a 1891 number in Limerick as well as in Dublin and Cork.

But Mr Ryan is still angry, saying the new charge is inhibiting the development of smaller operators: "To me it is not worth £1,000 per local area," he said, adding this would mean an additional £20,000 cost if he expanded local call access to the whole State.

However, a Telecom Eireann statement on the matter presents a stark choice: "There is no obligation on the part of ISPs to move to the 1891 access code. They can, if they wish, remain with the old system of using ordinary local numbers for supplying Internet access to their customers.

"However, in that event their customers will not benefit from the reduced Internet access rates which are now available on the 1891 access service."

Mr O'Dea described the situation as "very unsatisfactory", adding: "I am looking forward to making a detailed submission to Telecom Eireann on the matter."