Post Office prepares to challenge BT grip on residential market

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The Independent Online

The Post Office is in talks with Cable & Wireless over plans to offer free local phone calls, challenging British Telecom's dominance in the residential phone market.

The Post Office is in talks with Cable & Wireless over plans to offer free local phone calls, challenging British Telecom's dominance in the residential phone market.

The organisation, part of the Royal Mail group, is also thought to be talking to the logistics company Servista and the call centre firm Inkfish about the project.

Cable & Wireless could provide access to its telephone network to Post Office customers in a package which would be branded by the Post Office and sold through its 16,000 branches.

Cable & Wireless already has similar arrangements with Lloyds TSB, Tesco and Centrica, which are all trying to get a slice of Britain's £20bn-a-year residential phone market.

David Mills, the chief executive of the Post Office, recently expressed a desire to compete in this arena as part of his plan to stem the losses of the mammoth business.

"We want to be in the home phone market and for that you need the distribution network, a huge billing engine and a good call centre. We will need partners to get us there," Mr Mills said.

The Post Office is understood to be planning to launch a trial of its new home-phone offer in September. It already runs a limited service, with discount calls available by dialling a four-digit prefix.

The Post Office would not comment specifically on the status of its talks with Cable & Wireless, saying: "We talk to lots of people all the time so that the Post Office can develop new products and services."

Mr Mills, a former head of retail banking at HSBC, where he set up the internet bank First Direct, has launched a series of initiatives to revive the Post Office's fortunes.

So far, most of the plans have centred on using the Post Office's huge branch network to compete with the banks, by offering a range of financial services such as personal loans.

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