O2 Signals Move Into Home Phone Market

Competition in the UK fixed-line market is heating up after mobile operator O2 announced that from March it would offer a home phone to new and existing home broadband customers.

Dubbed “O2 Home Phone”, the decision by O2 is likely to trigger other mobile operators to follow suit as they look to squeeze more revenue from a saturated mobile phone market. O2 says that the move is part of its strategy of “placing itself at the heart of UK households,” as it seeks to consolidate and build up its position in the home broadband market.

The idea is that customers will have the convenience of having their broadband and home packages combined.

O2 will be offering two home phone packages, available only to its O2 Home Broadband customers.

The first package is ‘Evening & Weekend’, which will cost £9.50 per month and offers unlimited calls to UK homes on evenings and weekends. The second package is called ‘Anytime’, which is more expensive at £12.50 per month, but provides any time, unlimited calls to UK homes, 0845/0870 numbers and landlines in over 20 international countries.

Meanwhile O2 mobile customers will be able to get O2’s standard broadband package and Evening & Weekend phone package for just £17 per month, including line rental.

Both home phone packages include services such as Hide My Number, Last Caller ID, and Last Number Delete. Additional services such as Voicemail, Call Waiting, Caller Display, Ring Back are available as optional extras.

“This is the most important launch for us in the home space since we entered the broadband market and is part of our strategy to evolve beyond mobile to a leading connectivity brand ,” said Sally Cowdry, UK Marketing Director at O2.

“We know how many of our customers value the convenience of paying for their home phone and broadband together with no hidden extra costs, and we will be bringing the same commitment to quality of service with our home phone service as we have successfully established with broadband,” she added.

The news comes after a difficult period for O2. Back in November the operator’s two year exclusivity deal for Apple’s hugely popular iPhone device came to an end. Then it suffered a number of embarrassing network failures in London, which the boss of O2 apologised for at Christmas, blaming the bandwidth strain from the increasing use of smartphones.

It is also contending with a saturated mobile phone in the UK, with new players such as Tesco, increasing competition. However the announcement from Telefonica-owned O2 is likely to see other UK mobile operators following suit – bad news for BT, which is struggling to protect its own fixed-line revenues.

“The UK market is already one of the most competitive telephony markets in the world, with BT making its network available to all service providers,” said BT in response to a query from eWEEK Europe.

“BT Retail offers UK consumers some of the best value packages around and, following the recent Ofcom announcement, will be launching some exciting new bundled offers in the near future,” it added.

However the move must be especially galling for BT, considering that it used to own O2 (then called BT Cellnet). BT sold off BT Cellnet in November 2001 in order to reduce its debt burden at the time, but unfortunately that move left the British operator without a mobile operation to act as growth engine in the following years.