ComReg is to impose a price cap on the amounts Eircom can charge for line rental from September.

After a consultation, ComReg says there should be limits on what the telecommunications firm can charge for its retail access services.

The regulator says that the move should ensure that Eircom's prices reflect efficient costs, while offering an incentive to the company to improve its delivery of services.

The year-long price freeze comes into effect at the end of September. After those 12 months the price cap will be amended to take into account the rate of inflation.

ComReg wants this system to be kept in place until September 2010.

The commission has said it is wary of setting too severe a price cap, as this could have an adverse affect on innovation and long-term investment at Eircom.