Mercury Communications Ltd announced its promised price cuts, effective September 2, for all of its users yesterday, in a gung-ho response to British Telecommunications Plc’s announced tariff changes early this month. Unlike the the BT changes which benefited the business user at the expense of higher residential bills, Mercury’s reductions are across the board. The company also announced a Frequent Caller Programme designed to counter BT’s similar Options scheme. The reductions are much bigger than I expected said Vivienne Peters, chief executive of the Telecommunication Users Association. At the same time she questioned whether possible cuts in revenue would hit Mercury’s investment in network improvements. Both BT’s Options and Mercury’s new Frequent Caller Programme are designed to give high volume customers cheaper call rates in return for higher monthly rentals. However Mercury has taken the unprecedented step of giving all its users the bulk discounts for three months, during which period the extra rental charge will be waived. Previously the two carriers have avoided criticising each others services too directly, but yesterday, Peter van Cuylenberg, Mercury’s chief executive described his new offering as definitely… a better deal than the Options that BT is introducing next month. Mercury claims that business customers connected directly to its network will now save an average of 17% on their calls against BT prices, while residential customers will save 35% on economy rate, long distance UK calls and 15% on many major international routes. Mercury is gambling that the financial impact of its lower prices and discount programme will be offset by an influx of new users and is particularly keen to attract more residential customers. With just 5% of the market to date the gamble could succeed.
