The telecoms regulator should keep in place the current price cap on retail telecoms services, introduce a wholesale cap and ignore recent claims by Eircom that the retail cap is hampering new entrants into the market and preventing investment, according to telecoms lobby group ALTO.

The chairman of ALTO, Mr Iarla Flynn, yesterday said claims made by Eircom during recent lobbying to have the cap removed had been disingenuous.

"To remove the price cap would give Eircom carte blanche to increase prices where they have a monopoly and squeeze competition out of the market by lowering the retail prices for other services," Mr Flynn said, adding consumers would have no protection from such anti-competitive practices. One hypothetical scenario would be that Eircom could increase line rental charges, which will affect practically every home and business in the State, Mr Flynn said.

"This would enable the company to create a war chest to fund reductions in other areas where they are competing with other operators such as carrier pre-select," he said. "We urge the regulator to maintain the price cap until such time as a new regime can be introduced which will stimulate competition and result in greater protection and savings for consumers."

A spokeswoman for Eircom said the company was confused by the timing of ALTO's announcement yesterday and said elements of the group's stance on the price cap issue seemed to contradict the line taken by some ALTO members. She said Eircom did not comment on hypothetical scenarios such as those put forward by ALTO on the price cap issue.

ALTO - the Association of Licensed Telecommunications Operators in Ireland - represents the interests of new entrant operators in the Republic. Its members include, among others: Esat BT, Budget Telecom, Cable & Wireless, Chorus, Colt and ESB Telecommunications. The group favours a price cap system that covers both retail and wholesale price controls.

Mr Flynn said wholesale price caps could work in the interests of competition as they forced down the rates for key service inputs for operators. "Experience in the Irish market has shown that such reductions lead to direct and sustainable improvements for consumers," he said.