Eircom refused to allow notice to be given to the 40,000 customers who lost telecommunications services when it cut off Smart Telecom last week, an Oireachtas committee heard yesterday.

Eircom stopped providing wholesale services to Smart early last week because the company owed it €4 million. The move meant that services to 40,000 Smart Telecom customers were severely curtailed.

Yesterday, Isolde Goggin, chairwoman of communications watchdog, ComReg, told an Oireachtas committee that the agency had asked Eircom to allow 24 hours to give notice to the affected customers but the company refused.

"The consequences of Eircom's decision to withdraw wholesale services are unacceptable and indicate a requirement to put in place a system to facilitate prior notice in the event of a withdrawal of services by a wholesale service provider," she said.

However, Ms Goggin stressed that Smart failed to meet its obligations to its customers. She also pointed out that it owed Eircom a substantial sum of money.

Her colleague, John Doherty, confirmed to the Oireachtas Joint Committee on Communications, Marine and Natural Resources, that Eircom told the regulator that Smart had broken its connection agreement 19 times.

"Obviously, Smart has a responsibility in relation to their trading relationship here," Ms Goggin said.

Eircom is providing an interim service and has reached agreement with Smart over the disputed €4 million. ComReg had an emergency plan which ensured that customers kept vital services last week such as 999 calls.

Ms Goggin told the committee that ComReg was in talks with the Department of Communications about the possibility of including a provision in an upcoming Telecommunications Bill that would allow ComReg to ensure that customers get 24 hours notice where a wholesaler is cutting off their supplier.

But she warned that it would not always be possible for ComReg to take interim or emergency action in situations where companies had ceased trading or had financial problems that threatened their survival. "It would not cover every outcome," she said.

Ms Goggin explained that, despite its difficulties last week, Smart continued to trade.

Committee chairman, Noel O'Flynn, said that the incident damaged the development of competition in the Republic's telecoms market. He said that it would encourage people to stay with the "incumbent operator".