It aims to take 5 percent of BT's current residential telephony business by 2008, which would equate to around one million BT customers. It claims that its phone service would be up to 20 percent cheaper than BT's.
Gordon Steele, the executive director at the Post Office, said it has not ruled out moving into the UK's broadband market, but is initially hoping to establish credibility first through its phone service.
"It is a bit too early to be looking at broadband, directory enquiries or other technologies that are out there," said Steele. "We will look forwards at the end of the first 12 months and see how well it's going."
But analysts have doubts about the Post Office's plans. Mike Cansfield, a research director at Ovum, said its home phone offering does not offer sufficient cost savings over BT and it is likely to struggle in a market that is already very competitive.
"In terms of the offer, the Post Office claims average savings on calls of 12 percent against BT's Option prices. BT's daytime Option 1 call price is 3p per minute (minimum charge 5p), so whilst the headline percentage looks attractive, in real money the saving is small," said Cansfield in a statement. "On the line rental element, the Post Office plans to charge the same as BT so there is no cost saving for the customer."
"Turning to the market, we aren't sure why the Post Office has decided to enter the fixed-line residential market. As a market it is no longer expanding, and the Post Office will enter a very competitive segment that is red-hot already, and where prices continue to fall," Cansfield added.
Talkback
idiots, they should have teamed up, skype will ruin them both
Agreed. Skype will take down all telcos.
Why would they want to team up with Skype? The PO needs a traditional voice product to woo BT customers away, Skype will woo customers who have already chaged and gone with the likes of Talk Talk and Caudwell and who bed hop at the drop of a hat. It is the current BT customers who have probably not considered changing that will go with the PO. Fair play to them, if they have the budget they will attract the punters. BT needs to be brought down a peg, their latest ad campains were bordering on false statements.
Agreed, Skype will eventually have to charge for services.
The PO has a great channel to market and I know people who have signed up already - granted the service is new, but C&W are the number 2 telco in the UK. I think C&W are also providing the network for Caudwell, Tesco and Lloyds TSB amongst others so the quality should not be an issue.