Magazine article Marketing

Telephone Rivals Box Clever in Kiosk War

Magazine article Marketing

Telephone Rivals Box Clever in Kiosk War

Article excerpt

Trying to break a watertight national monopoly, which has virtually complete coverage and awareness, could be either a dream or a nightmare. For Mercury, which unsuccessfully took on BT in the payphone market, it was the latter - but can new player Interphone do any better?

Mercury pulled out of payphones last December after a six year street fight with BT, in which the challenger never made a penny.

"It was useful as a brand exercise," says Adrian Chamberlain, managing director of home business services for Mercury, "but the capital involved can be used much more elegantly in other ways. It was difficult to see where we were going with payphones. It was a non-core function."

Sites and sounds

Mercury made mistakes which Interphone has learnt from. Mercury sites were chosen for maximum visibility hood or sides, phones had no hood or sides, background noise was a problem.

Around 90% of Interphone sites will be enclosed boxes rather than Mercury's exposed hoodtops. Paul Harris, marketing director at IPM Communications, the Italian company behind Interphone, believes Mercury ignored the British climate.

Mercury had also opted for card-only phones, in part to make its phones less tempting to vandals and thieves. It seemed sensible with BT kiosks suffering up to 5000 attacks per month.

But the downside was that people had to buy cards to use the phones. This extra stage in usage put people off, and the technophones preferred cash. Also, with a peak of only 2500 phones compared to BT's 100,000-plus, it made little sense for people to invest in cards. Since everyone carries coins, and it has a huge network, BT had the 'impulse' call market sewn up.

Harris says Interphone's use of cash will be a key difference.

Bob Warner, BT's director of payphones, says: "Mercury thought it could educate the UK public to use cards - and they failed. People don't want to be forced to use cards." Over 80% of calls on BT boxes are still paid for in cash. Today, BT's payphone business turns over around 500m[pounds] a year and clears a 15% profit.

A familiar theme in the long war between BT and Mercury is that when Mercury enters a market, BT raises its game and the assumptions Mercury's strategy is based on become outdated. …

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