By Sylvia Carr, 10 January 2005 15:35
NEWS
The UK Post Office is taking on BT with a new residential telephone service called HomePhone, a move seemingly intended to help return the organisation to profitability after recent financial difficulties.
The Post Office promises up to 20 per cent savings over BT's Option 1 plan and aims to have one million customers by 2008.
Like BT, it will charge £11.50 per month (or £10.50 by direct debit) for line rental but there will be no minimum call charge, customers will be billed by the second and will receive one bill for lines and calls.
However, analysts have been quick to criticise the plan.
Mike Cansfield, research director at analyst house Ovum, said in a research note: "It doesn't quite add up - either as an offer from the Post Office, or from a market perspective."
Ovum pointed out that even a 20 per cent saving on 3p per minute - BT's Option 1 tariff - is insignificant and wholesale line rental customers will have to eventually deal with BT anyway, using the Post Office only as an intermediary.
Further, the Post Office, though it was in charge of the UK's phone service until the early 1980s through a business unit that spun off to become BT, has no experience in telephony and recent labour disputes have damaged its trust with customers, said Ovum.
And finally, Ovum portrayed the fixed-line market - with cutthroat competition, falling prices and low growth - as a tough one for any entrant and suggested, given the Post Office's high street presence, mobile phone retail sales would have been a better choice.
Comments
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1. anonymous
I think that any challenge to BT's monopoly of the home phone market is an advantage to the paying public. Without any real effective competition, BT has the autonomy to continue to charge over the odds and rack up obscene profits.