ESAT is reviewing its digital subscriber line (DSL) strategy and may not deploy the technology without a Government subsidy to support its investment.

DSL is a technology which enables companies to provide high speed "always on" Internet services and video over ordinary telephone lines.

Mr Richard Cooke, chief executive of the Esat Group, said yesterday the company was reviewing its DSL strategy and may pull out of trials with Eircom.

He said the high charges which Eircom proposed for accessing its local network made deployment of DSL uneconomic.

"We have a situation where we don't have a single local loop unbundled and Eircom's proposed charges are among the highest in Europe," said Mr Cooke.

Mr Cooke said the lack of progress on regulatory issues meant nothing would happen unless the Government took the initiative and subsidised the roll-out of DSL technology.

A decision by Esat to pull out of offering DSL may stall the deployment of the technology in the Republic. Eircom will have little incentive to offer DSL if there is no competition.

Eircom has said it will allow competing firms to offer bitstream access to its network from April. Firms would then be able to offer DSL services by renting a line from Eircom.

Last week The Irish Times revealed that six firms including KPN/Quest, Cable & Wireless and Worldcom had pulled out of DSL trials.

Eircom has proposed charging competing operators €32.50 per month to access a local loop on its network.

Telecoms regulator Ms Etain Doyle has asked Eircom to submit a lower offer.