Eircom plans to increase phone charges and line rental prices by up to 5 per cent from July 30th. The move will increase the average customer bill by approximately 3.6 per cent, writes John Collins.

Line rental will increase by €1.18 including VAT to €25.36. Other services that will be affected include local and national calls, the minimum call charge and directory inquiries calls. The phone company claims that even with the increases, the average Irish telephone bill for business and residential customers is below the EU average.

Eircom does not have to seek permission from ComReg for a price increase provided it stays within a price cap which is linked to inflation.

The move is likely to result in an increase in line rental from other operators because, under ComReg rules, the wholesale rate that Eircom charges them is a fixed percentage below the retail price.

Iarla Flynn, chairman of the alternative operators group Alto, called on ComReg to "urgently" look at widening the differential between wholesale and retail line rental.

"Telecoms prices are falling internationally, so there is no reason why this is going in the wrong direction," Mr Flynn said. "This is a bad result for consumers."

A ComReg spokesman confirmed it had received notification of the increases from Eircom and was "reviewing it at the moment to ensure it was in compliance with the price cap".

Eircom chief executive Rex Comb said: "Eircom has not increased line rental in over three years. As with any other utility operating in the Irish market, we continue to face the challenges of increased business costs, higher wages and the need to continuously invest in our network."

Given that Eircom continues to control more than 70 per cent of the market for fixed-line telephony, the increases will keep the pressure on the consumer price index inflation rate which has hovered about 5 per cent for the last six months.

Eircom said the increases were significantly less than the increases in gas and electricity bills in recent months. Figures released by the Central Statistics Office last week showed that annual inflation is mainly being driven by rising interest rates and higher energy prices.