A legal challenge by Eircom to a decision by the communications regulator to reduce the charges imposed by the firm on competitors for use of its local access network is expected to be heard by the High Court early next year.

Mr Justice Kearns yesterday issued directions for the exchange of documents between the sides in preparation for the trial. He also refused an application by the regulator for the discovery of certain documents from Eircom.

The new charges sanctioned by the Commission for Communications Regulation (ComReg) will not come into effect pending the outcome of the legal proceedings. Eircom has undertaken, in the event of losing its challenge, to reimburse all those who had in the interim to pay amounts over and above the charges set out in a directive of ComReg which was to have come into effect in early June. The case relates to the process of "local loop unbundling" and lawyers for ComReg have described the regulator's decision as a "benchmark for competition in telecommunications".

But Eircom claims the regulator made some serious errors in determining the charges. It says ComReg's decision will cost it up to €3 million in lost revenue annually and will also affect its ability to undertake much-needed investment.

It also claims the decision means it will have to rent its local access network to competitors below cost and, as a consequence, all prices across wholesale and retail services would be distorted.