Mobile telephones on the move: The fresh service from Orange is set to take a big market segment. Mary Fagan reports

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The Independent Online
ONE week from now Britain's fourth national mobile telephone network will be launched. The service, which carries the unlikely name of Orange, may be late in coming. But its credibility has been growing in the weeks and months leading to the debut.

Orange is run by Hutchison Telecom, part of Hong Kong's Hutchison Whampoa empire. It will be fighting to dent the position of the entrenched operators, Cellnet and Vodafone.

But the real battle will be between Orange and Mercury One-2- One, the mobile telephone service launched last September by Cable & Wireless and US West. One-2-One has done much to convince consumers that mobile telephones are no longer just for executives or the very wealthy.

The Mercury service was originally limited to London and the M25 area. Although it is gradually expanding it has been widely criticised for this cautious geographic coverage.

However, the company took the industry by storm by announcing free local off-peak calls. Such was the interest generated by this bombshell that Mercury could barely handle the inquiries from potential customers and had to hurriedly recruit extra support staff.

To add insult to embarrassing injury, there were not enough mobile telephones available for the One-2- One service - a situation that is only now being resolved. Mercury, having raised awareness of mobile telephony for the masses, was a victim of its own success and has been struggling to meet demand.

How successful Mercury One-2- One will be has been a subject of much speculation, mainly because the company has been keeping its numbers a secret.

The word in the industry is that it has now got between 60,000 and 80,000 subscribers - not bad for a company of its age. The real question is how many of those customers have joined up entirely or largely to take advantage of the free off-peak local calls.

The rumours have been somewhat wild. Stories abound about parents using One-2-One to prevent their children running up huge bills on the ordinary telephone.

There are tales of mini-cab drivers who charge clients for using the telephone even when the call is free. More bizzare are anecdotes about parents using the One-2-One as a baby alarm by leaving the line open all night free of charge with one telephone beside the sleeping child.

According to one industry source, only about 20 per cent of calls made by Mercury One-2-One customers are paid for. Mercury is understandably prickly on this issue, but it is not about to be goaded into making its numbers known.

A spokesman for the company said: 'There is no doubt that as an idea aimed at stimulating other calls and changing people's attitude, free calls have worked.' He dismissed speculation that the free calls would be discontinued. 'Free calls are not a promotion or a deal to make a dent in the market. They are a core element in our strategy and are there for the long term.'

Orange has yet to show its hand, but has eschewed the idea of copying Mercury's free calls, at least on such a widely available basis. Hans Snook, group managing director of Hutchison Telecom in the UK, said: 'Free calls are commercially a non-sustainable proposal if we are to get a return for shareholders and re-invest in the network.'

Like Mercury, however, the message from Orange will be that mobile telephones are for everyone. Trials conducted by the company over the past few months give an idea of what Orange has in mind.

The trials included a package for consumers with a monthly subscription fee of under pounds 15, and peak call charges of 25.53p a minute and 12.77p off-peak. The business package has a pounds 21.28 monthly fee but lower call charges and a third package offered 180 minutes of 'free' calls for a monthly fee of pounds 46.81.

The comparable offerings from Mercury One-2-One are Personal Call and Business Call. Personal Call customers pay a pounds 12.50 monthly fee, 25p a minute for peak national calls and 10p a minute for national off-peak - and nothing for off-peak local calls. Business users have a monthly charge of pounds 20, and pay 16p a minute for peak or 8p for off-peak calls whether local or national.

The likelihood is that Orange will focus next week not on charges but on the advantage of coverage.

With investment plans of pounds 700m, Orange is promising to be available to half the population at launch, 70 per cent by the end of the year and 90 per cent by the middle of 1995.

This national roll-out is much swifter than had been expected and has whetted the appetites of industry analysts. The consensus is that Mercury will be forced to accelerate its expansion plans or fall behind the newcomer.

Orange is also expected to offer novelties including the ability to have two lines per telephone - one for business and one for personal use - with different ringing tones and bills. The telephones will also allow users to identify the incoming caller by showing a name or number on the display, although this needs to be approved by the regulator, Oftel.

However, gimmicks are not necessarily the name of the game in mobile telephony. According to Vodafone, customers are interested in the price of equipment, how much they pay per month, and the quality and coverage provided by the service.

The Orange and One-2-One services are both based on new digital technology, which in theory offers superior voice quality and more secure communications than traditional analogue mobile telephones. That should also mean higher prices but already it is possible to pick up a digital mobile telephone for pounds 99 to pounds 150.

Where Cellnet and Vodafone clearly have an edge is that their brand names are well known and they have national coverage on their existing networks. Dealers are selling the analogue telephones for as little as pounds 45 - if not giving them away free. Cellnet and Vodafone already have more than 1 million subscribers each - and they have benefited enormously from Mercury's advertising campaign which, there is no doubt, has expanded the mobile marketplace.

Just to confuse the issue, Vodafone now offers a digital service, which will also allow users to call from some overseas countries. Cellnet's digital service - also with an overseas 'roaming' option - is expected to be launched in July.

The danger is that consumers will become increasingly bewildered at the options open to them and the complicated nature of the price packages.

It is hard for the average person to work out exactly with whom and on which tariff he or she will be better off. But it seems not beyond the bounds of belief that Britain could have 10 million or more mobile telephone subscribers by the end of the decade. This cake is big enough to be sliced in four.

There is also no doubt that Cellnet and Vodafone need their fledgling rivals to succeed. No one could have foreseen the spectacular growth of cellular telephones and success of the original duo. Without more and efficient competition, the hand of regulation must soon come down on mobile telephony.

(Photograph omitted)

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