Post Office re-enters home phone market

The Post Office today launched a bid to re-establish itself in the home phone market, with a low-cost service.

11:06 10 January 2005

The Post Office today launched a bid to re-establish itself in the home phone market, with a low-cost service.

From 1896 to 1981 the Post Office was responsible for the vast majority of the UK's telephone network, but the British Telecommunications Act separated responsibility for post from phones. Since then BT has become the dominant force in residential telephony in Britain.

But today sees the Post Office launch a bid to reclaim the market it once dominated.

The new low-cost HomePhone service is aiming to take back a million customers from BT in the next three years, by undercutting the telecoms giant by up to 20 per cent.

"We have one of the most trusted, credible and recognised brands in the country. We'll be building on this to launch our Post Office HomePhone service which will be amongst the most competitive in the marketplace," said Post Office chief executive, David Mills.

While many firms have tried to tap into BT's home phone business recently, the complication of differing bills for line rental and telephone calls as well as the perceived hassle of changing providers and the reputation of BT has held many new entrants back.

But the Post Office feels it can sidestep many of these problems, building off a brand that is already instantly recognisable and widely trusted.

"Post Office is at the heart of communities across the UK, with a network of almost 16,000 branches. Through listening to what our customers want we are responding to meet their changing needs by diversifying and offering a range of new products - from financial services to telephony - and updating familiar favourites," Mr Mills added.

The Post Office joins firms including the Carphone Warehouse and Centrica in trying to swipe a slice of BT's landline market by cutting prices.

However, several years on from competition being introduced, BT still controls 70 per cent of the UK's residential telephones.

The new HomePhone service form the Post Office will cost consumers the same amount as BT for line rental, but will bill consumers by the second - rather than minute or hour - and not impose a minimum call charge.

HomePhone has said its simple pricing structure will see customers save 12 per cent on BT's Together Option 1 tariff and other households could save 20 per cent on their current bill.