The UK Post Office is to launch a home telephone service.
Details have been announced about the Post Office’s new telecoms service, called HomePhone. The service will primarily target BT’s residential customers with Royal Mail hoping to sign up 1 million customers, 5% of BT’s residential business, by 2008.
Royal Mail said the new service will provide customers with one bill covering both calls and line rental and could work out as much as 20% cheaper than BT for some households.
Cable & Wireless will carry calls for the new service, and Servista, a provider of customer care and billing software services for the utilities and telecom sectors, will handle the new operation’s billing system.
The announcement forms part of the group’s efforts to find alternative ways to generate income, having also sought to penetrate the banking and insurance sectors. The rationale behind the idea of penetrating new markets lies in capitalizing on the group’s huge branch network in the UK, which allows the Post Office to have a wide customer reach, almost unrivalled in the country.
Apart from wider reach, Royal Mail also expects that the new service will benefit from cheaper calling rates and the power of the Post Office brand, believed to be associated with trust in the public mind.
Royal Mail’s financial difficulties over the past few years have been widely documented. The company has cut jobs, closed post office branches and canceled its second delivery service. The impending deregulation of the UK mail market will allow new entrants to compete directly with the incumbent operator and curtail some of its market share. It is understandable, therefore, that the group should expand its product portfolio and penetrate new markets.
Nevertheless, the residential phone market is a saturated and highly competitive arena, with more than 20 residential fixed-line suppliers operating already. It is also debatable whether the brand equity enjoyed by the Post Office badge will be able to overcome the wider association with parent Royal Mail at a time when public perception of the postal service is running at an all-time low.
