The stealthy advance of a telecoms underdog

DEREGULATION may have thrown Britain's telecommunications market open to competition, but the practicalities of breaking into this multi- billion-pound industry are a good deal more complex than the theory. Competing with the likes of BT and Cable & Wireless generally requires a lot of money, not least for financing the advertising needed to remind customers of a newcomer's arrival.

However, Redstone Telecom is set upon taking on the big players through more stealthy means. Admitting that it does not have the funding to set up its own network, it says it is relying on innovation to make up for its lack of firepower.

The latest evidence of this strategy came last week when it announced that it was launching a national service through, in effect, piggy-backing on the Fibernet network set up to transmit data rather than voice.

Graham Cove, managing director of the company, says the move brings it the country's fifth or sixth largest network, so giving it an edge over such operators as Colt and Scottish Telecom, which are limited to running regional networks. The result is that a business with offices spread between such areas as Scotland, the North-west, London and the West can now see Redstone as a potential telecom service provider alongside the likes of BT, Cable & Wireless Communications and Energis.

Nor does the innovation end there. Redstone, which has signed an initial pounds 1.8m contract with Fibernet, has come to an arrangement with the company whereby it pays more for use of the network as its customer base grows. It has also set up a rolling programme for purchasing more of the Nokia switches that enable access to the network over the next two years.

Mr Cove says: "Our network is set to shake up the market. Until today, multi-sited, medium-sized corporates have had few options in terms of telecoms operators, as only the big three are able to offer them directly connected services.

"We aim to open up the market place, offering more choice and real value to businesses. Our return on investment cycle is also much shorter than that of other, networking-owning telcos. I wouldn't be surprised to see others following in our wake."

Bold words. But Mr Cove admits that the penetration of small players such as his organisation is greater among business users than among residential customers.

BT still has about 80 per cent of the residential market, with the only real competition coming from the cable companies, but its share of the business market, where managers are more apt to see the cost benefits of competition, is down to about 50 to 60 per cent, he says.

However, he insists that the UK is big enough to enable his organisation to create a solid business even with a small share of the total sector. Once Redstone is on the way to achieving that, he is set to expand further afield.

"There are opportunities in Europe, but we are not going to take them until we've proven [the system] in the UK," says Mr Cove.

Even if doubters might feel the company is vulnerable to imitation by its bigger rivals and other would-be rivals, Redstone has made impressive progress since being granted a licence to run a public telephone network in 1995.

Founded by Simon Thomas and Richard Newsome, the company took on Mr Cove as its first employee and in the little more than two years since it started operating has seen turnover climb from pounds 1.8m at the end of the first year to pounds 8.2m last year. This year it is expected to show a similar (roughly 300 per cent) rise to about pounds 30m.

Key to this growth has been the company's development of a personal numbering system under which an individual can have a single telephone number, whether he is at work or at home, using a mobile or a land-based phone, in the UK or overseas.

Sold through such retailers as Carphone Warehouse, Dixons and The Link, the service has about 180,000 customers. This makes it, says Mr Cove, the largest service of its kind in the UK and possibly the world. The nearest UK rival, he adds, has about 30,000 to 40,000 customers.

The workforce in Borehamwood, Hertfordshire, has grown to 70 and, though regulation specialist Mr Newsome is no longer actively involved in the company, Mr Thomas remains as operations director.

Three rounds of financing, the latest from a US investment bank, have got the company to its current position. But Mr Cove, who with the two founders holds about 30 per cent of the equity, admits that flotation on the London Stock Exchange might come as soon as next year.

Redstone is determined to punch above its weight and to be "a big player rather than a niche player" - and that might mean floating purely for the sake of becoming more credible to the large businesses with which it would like to deal. Competition in telecommunications could depend on Redstone being taken seriously.

News
More than 90 years of car history are coming to an end with the abolition of the paper car-tax disc
newsThis and other facts you never knew about the paper circle - completely obsolete today
News
people'I’d rather have Fred and Rose West quote my characters on childcare'
Life and Style
The new Windows 10 Start Menu
tech
Arts and Entertainment
There has been a boom in ticket sales for female comics, according to an industry survey
comedyFirst national survey reveals Britain’s comedic tastes
PROMOTED VIDEO
Travel
Bruce Chatwin's novel 'On the Black Hill' was set at The Vision Farm
travelOne of the finest one-day walks you could hope for - in Britain
Sport
footballManchester City 1 Roma 1: Result leaves Premier League champions in danger of not progressing
Arts and Entertainment
Gay and OK: a scene from 'Pride'
filmsUS film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence
News
i100
Life and Style
Magic roundabouts: the gyratory system that has excited enthusiasts in Swindon
motoringJust who are the Roundabout Appreciation Society?
Arts and Entertainment
Hilary North's 'How My Life Has Changed', 2001
booksWell it was good enough for Ancient Egyptians and Picasso...
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Trust Accountant - Kent

NEGOTIABLE: Austen Lloyd: TRUST ACCOUNTANT - KENTIf you are a Chartered Accou...

Graduate Recruitment Consultant - 2013/14 Grads - No Exp Needed

£18000 - £20000 per annum + OTE £30000: SThree: SThree are a global FTSE 250 b...

Law Costs

Highly Competitive Salary: Austen Lloyd: CITY - Law Costs Draftsperson - NICHE...

Day In a Page

Ebola outbreak: The children orphaned by the virus – then rejected by surviving relatives over fear of infection

The children orphaned by Ebola...

... then rejected by surviving relatives over fear of infection
Pride: Are censors pandering to homophobia?

Are censors pandering to homophobia?

US film censors have ruled 'Pride' unfit for under-16s, though it contains no sex or violence
The magic of roundabouts

Lords of the rings

Just who are the Roundabout Appreciation Society?
Why do we like making lists?

Notes to self: Why do we like making lists?

Well it was good enough for Ancient Egyptians and Picasso...
Hong Kong protests: A good time to open a new restaurant?

A good time to open a new restaurant in Hong Kong?

As pro-democracy demonstrators hold firm, chef Rowley Leigh, who's in the city to open a new restaurant, says you couldn't hope to meet a nicer bunch
Paris Fashion Week: Karl Lagerfeld leads a feminist riot on 'Boulevard Chanel'

Paris Fashion Week

Lagerfeld leads a feminist riot on 'Boulevard Chanel'
Bruce Chatwin's Wales: One of the finest one-day walks in Britain

Simon Calder discovers Bruce Chatwin's Wales

One of the finest one-day walks you could hope for - in Britain
10 best children's nightwear

10 best children's nightwear

Make sure the kids stay cosy on cooler autumn nights in this selection of pjs, onesies and nighties
Manchester City vs Roma: Five things we learnt from City’s draw at the Etihad

Manchester City vs Roma

Five things we learnt from City’s Champions League draw at the Etihad
Martin Hardy: Mike Ashley must act now and end the Alan Pardew reign

Trouble on the Tyne

Ashley must act now and end Pardew's reign at Newcastle, says Martin Hardy
Isis is an hour from Baghdad, the Iraq army has little chance against it, and air strikes won't help

Isis an hour away from Baghdad -

and with no sign of Iraq army being able to make a successful counter-attack
Turner Prize 2014 is frustratingly timid

Turner Prize 2014 is frustratingly timid

The exhibition nods to rich and potentially brilliant ideas, but steps back
Last chance to see: Half the world’s animals have disappeared over the last 40 years

Last chance to see...

The Earth’s animal wildlife population has halved in 40 years
So here's why teenagers are always grumpy - and it's not what you think

Truth behind teens' grumpiness

Early school hours mess with their biological clocks
Why can no one stop hackers putting celebrities' private photos online?

Hacked photos: the third wave

Why can no one stop hackers putting celebrities' private photos online?