My Department introduced a significant change to the telephone allowance scheme in October 2003. The structure of the allowance was changed to make it a cash credit on bills, not attributable to any particular component of the bill. This change makes it easier for additional service providers to participate in the scheme by applying a standardised allowance amount to bills irrespective of the tariff components.
In conjunction with this change, a special bundle rate — the Eircom social benefits scheme — was negotiated with Eircom, which provided telephone allowance customers with line and equipment rental, plus an enhanced call credit of up to €5.35 worth of free calls per two-month billing period. The cost of the bundle, which is €20.41 plus VAT per month, was at a substantial discount to the previous cost of these services.
The Commission for Telecommunications Regulation, ComReg, recently approved a price increase application from Eircom of 7.5% in line rental, effective from 4 February 2004. A lesser percentage increase is also being applied to telephone instrument rental where applicable. It is my understanding that these increases will be offset by reductions in call costs in order to limit the average private customer bill increase to the consumer price index rate.
Following detailed discussions between officials of my Department and Eircom, it was agreed that the increase in the Eircom social benefits scheme would be limited to the rate of the CPI, which is 1.9%. Some technical restructuring of the social benefits scheme was also agreed which removed some additional call unit value. To offset this, Eircom offered to give low-use customers up to €10 worth of free calls per two-month bill, by offering them its separate vulnerable users scheme, in addition to the social benefit scheme.
The revised package results in an increase to the social welfare customer of €0.94, including VAT, per two-month bill. The other revisions to call costs by Eircom should be broadly beneficial to social welfare customers.
There has not been a significant demand to date from social welfare customers to have the allowance transferred to mobile phones. This may be due to the fact that most customers who have a mobile phone also have a land line. I am committed, however, to the development of the telephone allowance scheme to respond to the expanding telecommunications market and to facilitate greater client choice of telephone services.
My Department has had discussions with the communications regulator, ComReg, to develop the necessary technical and administrative arrangements for mobile phone services. These arrangements are necessary to ensure that the allowance will be applied accurately to individual customer accounts through any licensed service provider interested in participating in the scheme. My Department and ComReg have identified suitable mechanisms to enable this for mobile phone services.
Additional information not given on the floor of the House.
On this basis, I announced in December last that my Department was willing to discuss arrangements with any interested mobile phone service provider. Since then, my Department has had initial discussions with one licensed company and has preliminary contact from two others. In the new environment telephone allowance customers would be entitled to select the participating telephone service provider of their choice to suit their particular circumstances. Allowance customers would be entitled to switch between provider companies within a reasonable period if they so wished. It would be up to the provider companies concerned to design suitable marketing packages to attract and retain these clients, as with any other group.
If the initial interest now being expressed by mobile telephone provider companies develops into active participation, then I would expect that the necessary technical arrangements could be finalised between my Department, the individual companies concerned and ComReg. On that basis, I would expect that the option of applying the telephone allowance to mobile telephone bills could be made available to social welfare customers before the end of this year.