The cost of the telephone allowance scheme in 2004 is estimated at €92.2 million for some 300,000 customers. This represents a significant increase of nearly €9 million, or 11%, in expenditure on the scheme in 2003.
In order to ensure that the costs to my Department of the telephone allowance scheme are predictable and that the scheme does not become a distorting factor in the liberalised telecommunications market, a significant change to the scheme was made in October 2003. The structure of the allowance was adapted to make it a single integrated credit item on client telephone bills, not attributable to any particular component of the bill. The allowance is worth €49.39 per two monthly bill, including VAT. 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. This 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, €20.41 plus VAT per month, represents a substantial discount on the previous cost of the service.
Separately, the Commission for Telecommunications Regulation, ComReg, approved a price increase application from Eircom of 7.5% in line rental, effective from 4 February this year. A lesser percentage increase is also being applied to telephone instrument rental where applicable. It is my understanding that these increases are being partially offset by reductions in call costs in order to limit the average private customer bill increase to the consumer price index.
Following detailed discussions with my Department, Eircom agreed that the increase in the cost of its social benefits scheme would be limited to the rate of CPI, 1.9%, as part of which Eircom made a change to its bundle package by removing some additional call unit value. To offset this, however, Eircom has offered to give low use customers, including our own customers, up to €10.00 worth of calls free per two-month bill by offering them its separate vulnerable users scheme in addition to the social benefit scheme.
The revised Eircom package results in an increase in telephone costs to the social welfare customer of 94 cent, including VAT, per two monthly bill or less than 12 cent per week. The other revisions to call costs by Eircom, including wider promotion of its low user scheme, should be broadly beneficial to social welfare customers.
I have no plans at present to make any further changes to the telephone allowance scheme. Any future changes to the scheme will be considered in a budgetary context in the light of available resources and other priorities.