Telco undercuts opposition to attract home users

Telinco, a fledgling telco based in Cheshire, England, has announced a Home Connect service for residential and small and home office customers.

Home Connect is a bundled service comprising free Internet access plus national and international calls which undercut BT prices. Telinco, which has a porting contract with BT, is also planning to offer services such as voice mail, a personal 'follow-me' number and a freephone number.

Chris Matthews, chairman of Telinco, said Home Connect meets the demand for integrated communications products and said: "We have a lot of goodies we'll later be able to add."

Home Connect users must pay a £20 connection fee, and then spend at least £35 per quarter on non-local calls, otherwise charges will be rounded up to the £35 level. But Telinco's Matthews pointed out: "You'll be saving about that if you switch from a lot of dial-up Internet service providers, which charge about £12 a month."

Alan Pine, a director at telecoms consultancy Schema, said: "Their approach is a good one. In fact, the service may or may not prove cheaper than others, but it does give customers the impression they have more control over what they spend. Our research has shown many customers are concerned they don't know what they're spending now."

However, Andy Greenman, a Yankee Group analyst, warned: "They need to have a clear and concise marketing message, and they're also up against the cable operators, so it will be a long, hard slog. But there's no doubt high-end spenders will be interested."