Since the show of public celebration that followed the Department of Trade & Industry’s award of Telepoint licences in January, the four successful applicants have been facing the altogether more difficult task bringing the whole concept of Telepoint to the market. The four successful Telepoint applicants – Callpoint, Phonepoint, Ferranti Creditphone Ltd and the Philips-led […]
Since the show of public celebration that followed the Department of Trade & Industry’s award of Telepoint licences in January, the four successful applicants have been facing the altogether more difficult task bringing the whole concept of Telepoint to the market. The four successful Telepoint applicants – Callpoint, Phonepoint, Ferranti Creditphone Ltd and the Philips-led consortium – have since adopted a low profile as they hammer out strategies during the critical pre-launch period; this coy approach is sure to be shattered by the summer, however, when the operators will launch their plans to an unsuspecting general public. The four Telepoint operators have been busy acquiring base-station sites, forming supply channels for handsets and finalising marketing plans; the main commercial centres of London will be the initial targets for base-station sites, plus the main trunk routes out of the capital. With all four consortia likely to launch their respective services within a three month period, product differentiation will be of primary concern; Callpoint and the Philips-led consortium will stress the technical features of their networks, such as itemised bills, call barring and call value limiting facilities. Attempting to avoid the problems of the cellular operators, Ferranti management will make call quality a central concern, and will focus on this during the early part of its promotional campaign; and, like all operators it will use its own levels of subscription and call charges. All the operators, however, concede that word of mouth communications could make or break all their best laid plans. The British Telecommunications Plc-led Phonepoint consortium is looking to dominate in terms of the number of base-stations sites, with by far the most ambitious site acquisition plans. Coverage key Base-station coverage will be a key issue for all four operators; handset holders will be able to use public base-stations that come from the same manufacturer. Thus, Phonepoint subscribers will be able to use Callpoint public stations as both networks use Shaye equipment; Ferranti’s Zonephone network will, of course, use Ferranti’s own handets and stations. Consequently, Philips’ decision on whose equipment to take could turn out to be crucial – if Shaye is able to persuade Philips to take its Forum handsets, as now seems likely, Ferranti subscribers will be restricted to Zonephone’s public stations; Ferranti may consequently be forced to target groups with relatively low use of public stations, but higher use of fixed home and office facilities. All four operators are looking to businessmen in small to medium sized companies for initial market penetration, followed by moves to attract affluent consumers; all consider Telepoint to be too radical an innovation to make large corporations a viable early target. For the first six months Telepoint handsets will be promoted as the modern means of communications for the trendy elite; Shaye even developed a prototype handset designed to fit snugly into a Filofax. The operators then want to bring Telepoint to a wider market, initially by promoting handsets as an original gift for Christmas 1989. Shaye will sell handsets directly to the Callpoint consortium, but says it is doing everything possible to make Callpoint an arms’ length operation to its own manufacturing base, and simply be an independent company with three parents, Mercury Communications Ltd, Motorola and itself; Shaye says that it does not want to put of all its Telepoint eggs in one basket, or do anything that would sour its relationship with the other Telepoint operators. Winchester, Hampshire-based Shaye wants companies to integrate Telepoint into its communications systems, and pick and mix the Telepoint equipment it uses; management predicts 3m Telepoint holders by the mid1990s. Shaye’s UKP150 Forum phone, which weighs 4.6 ounces, will retail below the pschologically important UKP200 mark; Shaye which subcontracts manufacture of its Forum handsets to Philips’ Dunfermline, Fife plant, says lithium batteries, allowing 5
0 hours of talk time, will be available for less than UKP5; the phones can also be recharged in three hours. The licence granted to the Philips-led consortium was considered by many observers to be the Department of Trade & Industry’s most surprising choice. Philips’ consortium, still unnamed, with Shell and Barclays Bank has just created a management structure; it includes Philips Telecommunications and Data Systems’ Telecom Division marketing director Peter Wright, as managing director of a Philips-dominated team. The consortium is likely to be the last to bring its network to the market, with a launch date set for autumn. It will start with 1,000 stations, set to rise to 4,000 by the end of 1990: it eventually wants around 6,000 UK sites, and has a long term target of 40% market share. Philips, the only communications company to find itself partnered with firms from outside the industry, was attracted to the potential input from Shell’s computer division, rather than from its sites – a relatively small number of which are situated in the much sought-after commercial districts of the UK’s cities. This is where Barclays Bank came in: not only does it have a large base of ideal sites for stations, but the bank’s experience in choosing and operating sites for its automatic teller machines was also thought to be extremely useful. Hiring out phones Meanwhile, Ferranti is gearing itself up for a Telepoint launch in mid-summer, with around 1,000 points. Its handsets, which weigh nine ounces, will be under UKP200, though it doesn’t envisage high street chain stores being major suppliers. It will attempt to differentiate through quality of service, and says it has carried out very extensive Beta tests on its handsets. Ferranti also hopes to benefit from being the only company to operate a Telepoint service as well as make handsets; it has also been busy acquiring sites, and is believed to have struck a site deal with Esso that it hopes to make exclusive. Ferranti subcontracts the manufacture of its handsets to AB Electronics, Abercynon, South Wales. Phonepoint – backed by the vast resources of British Telecom, which holds 49% of the company, STC, France Telecom, Nynex Corp and the Deutsche Bundespost aims to be the company to introduce Telepoint to the UK, by launching a service around July. The Department of Trade & Industry’s restrictions on British Telecom have been tightened since Phonepoint was given a licence back in January, and it is now barred from any reference to Telecom in its advertising. Senior Phonepoint management, dominated by former British Telecom staff, wants to blitz the market with a massive site acquisition campaign; by 1993 Phonepoint wants anyone in a major city to be within 500 yards of one of its stations, and have 90% of the UK mainland population covered. It will sell handsets through high street retailers and directly to public; there will be a charge of UKP20 for membership of the network, plus a subscription of UKP8 per month: call charges will be a few pence a minute above the rates now charged in public phonebooths. Phonepoint is also the only consortium that is still considering hiring out its handsets.