The Commission for Communications Regulation (ComReg) took a step towards opening Vodafone's and O2's networks for use by "virtual operators" yesterday.

In a decision notice published on its website, the regulator said it was formally designating the two biggest Irish mobile firms with significant market power.

This designation forms the basis for ComReg's controversial proposal to allow new entrants to the mobile market to piggyback on Vodafone's and O2's existing mobile phone networks. This would enable "virtual operators", or firms that do not own a large amount of their own mobile phone infrastructure, to offer consumers cheaper mobile services.

In its review of the market, ComReg said yesterday that it found the mobile market was not effectively competitive because of the joint dominance enjoyed by Vodafone and O2.

The paper also said that the next step for ComReg was to formally impose an obligation on the two biggest operators to open their networks to alternative operators.

Both Vodafone and O2 have said they will appeal ComReg's proposal to force them to open their networks to competitors. The firms are both likely to appeal to a new Electronics Communications Appeals Panel, which was set up by the State to oversee ComReg's decisions.

Industry experts believe that the appeals by the two biggest mobile firms could severely delay the entry of "virtual operators". MinuteBuyer, a firm that has already talked to Vodafone and O2 about getting access to their networks, said yesterday it could be up to a year before a firm can enter the mobile market.

ComReg is expected to issue its formal decision notice forcing the mobile firms to allow "virtual operators" use their networks within the next few weeks.