Internet cafes face a new challenge over the next year as a small Irish telecoms firm, Dome Telecom, installs a network of 250 prepaid internet terminals in buildings across the Republic.

The company, which already generates annual revenues worth about €8 million from its prepaid call-card business, has installed 18 terminals in the greater Dublin area and will introduce a further 24 terminals in a matter of weeks.

The computer terminals are all based in buildings where large numbers of people gather such as hospitals, hostels and convenience stores. Members of the public can use the terminals by buying a prepaid internet card from nearby vending machines.

Several hostels, including Ashfield House in Dublin city centre, have installed the terminals, and are offering Dome Telecom's internet service at a fee of €1 for 15 minutes and €2 for 40 minutes.

Convenience stores have also expressed an interest in hosting the terminals and will benefit from a revenue share deal that Dome Telecom offers landlords.

Under this contract, Dome Telecom pays landlords a percentage of the revenue generated from the computers. It also pays for the installation of the equipment and the broadband costs.

Dome Telecom has also built an internet portal for its customers, many of whom will be foreign nationals who do not have home access to the internet.

The internet portal, branded Century Surf, offers Web links to a range of travel, Government and public services. It may also, in the future, host advertising to generate additional revenue, says Mr Dara O'Mahony, managing director of Dome Telecom.

"We are attempting to take the person out of the internet cafe and offer them an alternative prepaid internet service," he says.

"I think this will be a major threat to cafés, which are already under pressure because of the roll-out of broadband to the home."

Typical costs for broadband internet access in Dublin internet cafe's range from about €2.50 to €6 per hour. These prices generally reflect the high costs of staffing, utility expenses and insurance, whereas Dome Telecom's service should not suffer from all these extra expenses, according to Mr O'Mahony.

The prepaid cards for the internet service are available from vending machines placed close to the computer terminals. They are very similar to telephone calling cards. To use them, a consumer must scratch a panel at the back of the card and punch the code into the computer terminal, says O'Mahony, who has already created a vibrant annual business from selling prepaid phone cards in the telecoms business.

Dome Telecom, which was founded in April 2000, also owns and operates a network of payphone terminals and supplies cut-price telephone services to certain groups, including the Irish Defence Forces, Budget Travel and Independent Holiday Hostels.

The firm has spent €2 million on research and development in the past two years, according to Mr O'Mahony.