Joe Costello
Question:33 Mr. Costello asked the Minister for Social and Family Affairs if he has completed his review of the free telephone allowance; the outcome of the review; and if he will make a statement on the matter. [33446/04]
View answerWednesday, 15 December 2004
Questions (25)
Written answers
Expenditure on the household benefits package which includes the telephone allowance, the electricity-natural gas allowance and the free television licence is estimated at €280 million this year. My Department undertakes negotiations to obtain the best commercial terms and value for money for this very sizeable annual expenditure on the household benefits.
The structure of the telephone allowance operated by my Department was changed in 2003 to make it a cash credit on bills and not attributable to any particular component of the bill. Previously the allowance had covered the line and instrument rental charges specifically, along with a small element of call costs on each two monthly client bill.
This change in the structure of the telephone allowance was designed to make it easier for eligible clients to choose from a range of participating service provides as the newly standardised allowance can be applied to phone bills from any service provider irrespective of the tariff components. Currently, there are four service providers, including Eircom, participating in the telephone allowance scheme and three more have expressed an interest in participating.
In conjunction with this change, a special bundle rate, the Eircom social benefits scheme was introduced by Eircom, which provides 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 represented better value for money for the ongoing expenditure on these services.
Subsequently, the Commission for Telecommunications Regulation approved a price increase application from Eircom of 7.5% in line rental, effective from 4 February 2004. A lesser percentage increase was applied to telephone instrument rental where applicable.
Following detailed discussions between my Department and Eircom, it was decided that the increase in the Eircom social benefits scheme would be limited to the rate of the consumer price index — 1.9%. This added a total of 94 cent to the two monthly bills, 11% per week, of Eircom customers who are recipients of the telephone allowance. Other Eircom customers have incurred an increase of 7.5% or €3.48 per two months. Eircom has also offered to give low use customers up to €10 worth of calls free per two month bill, by offering them its separate low users scheme in addition to the social benefit scheme.
Claimants of the telephone allowance are free to choose the service provider which they feel gives them the best value for money. Depending on which service provider is chosen, the €20.41 per month paid by the Department can cover line rental and instrument rental in full as well as providing a set value of free calls. One provider participating in the scheme provides full cover for line and instrument rental and €5 free calls per month for the €20.41 paid by the Department.
As I advised the House on 21 October last, I had asked my Department for a report on the telephone allowance scheme to assess the implications of the changes in the scheme. I recently received this report and am currently considering it.