Esat BT plans to introduce a flat-rate internet service in the Republic from early 2003, but only if negotiations with Eircom on wholesale access rates are concluded, the firm said yesterday.

The company, which ditched a similar service last year because it cost too much to operate, wants to introduce the service at a monthly fee of about €25 to €35. The proposed service would be the State's only full flat-rate product, although last week UTV Internet introduced an off-peak flat-rate internet service for use at weekends and evenings.

But Esat BT said it must first persuade Eircom to offer it a cost-effective wholesale agreement for flat-rate internet access. To date, Eircom has refused to provide this access, arguing it would not be cost-effective for the firm.

An Eircom spokesman said yesterday the firm had not concluded any agreement on this issue.

"Our focus is on providing consumers with competitively priced internet access rates which do not involve heavy subsidising of heavy users by low users," the spokesman said.

Mr Bill Murphy, Esat BT chief executive, said the introduction of a flat-rate product was long overdue as it was a key enabler in stimulating internet usage. He said internet penetration was lagging way behind at just 34 per cent, the third lowest in Europe.

"The message we have been getting loud and clear from industry groups, State agencies, businesses and consumer lobbying groups is that flat-rate internet access is urgently required," he said.

Mr Murphy made the comments at the launch of several new services by Esat BT yesterday, which offer consumers subscription-based internet access.

The new products, branded NetSmart, offer consumers 40, 80 or 120 hours off-peak internet access for monthly fees of €15, €25 and €30 respectively.

The products will be available to consumers using any phone service, and will be offered via Esat's internet service provider, Ireland On-Line.

UTV Internet responded to Esat yesterday by offering a 30-hour off-peak product at €10.99 per month. Consumers will also have to sign up for UTV's telephone service to use its internet product.