Heart-stopping time for Ocean boss in setting up telecom company

 

George McGrath used to cut off people's telephone lines as BT's hatchet man in Belfast. He describes himself as being "pretty ruthless" when in charge of billing in the late 1970s, a time of civil disobedience.

"I warned them I would cut them off. One or two did not believe me, and all of a sudden the situation changed."

Now, as chief executive of Ocean Communications - the joint venture telecommunications company set up by British Telecom and the ESB - he is vying with 28 rival firms to connect as many people as possible.

From the hoary days of operator-assisted calls to a modern deregulated market, changes in the State telecoms market over the past 15 years exemplify the technological revolution that has reached our shores.

Mr McGrath, from Ardglass, Co Down, has seen it before, having made his career with BT and its predecessor, General Post Office, and experienced deregulation in Northern Ireland. He describes it as an exciting time.

"All of the things that you wanted to do and could not, became possible. And all of a sudden you were treated as a businessman rather than an administrator," he says.

People may be gratified if a little nonplussed at the attention that what is after all, a very small market, with a population of 3.5 million, is getting. The full liberalisation of the market occurred last month with the granting of 18 general licences and 11 basic licences by the Director of Telecommunications Regulation.

With Ocean's own infrastructure and use of the ESB's, an investment of £130 million planned over four years, and access to BT's international Concert alliance, Mr McGrath is looking for between 10 per cent and 15 per cent of the total market. "I have a portfolio of products that nobody else on this island has," he says.

He adds that "Ireland is at the crossroads between the Americas and Europe and we really have to make use of that". He points to the booming telesales industry which is expected to more than double its workforce from the present 4,000 to 10,000 within two years.

"Ireland and the IDA and the Government have done a super job in attracting call centres using the base of youth and education. All of a sudden you have an economic sector that was not there before and we can actually maximise that."

However, he does envisage a "shake out" of three or four players in that period. "It will take a year for the market to settle down. Then you will begin to see casualties, rearrangements, alignments and some people will go by the by."

But with Ocean having the financial muscle of the ESB and BT - and the latter's experience - behind it, the six-month-old company is likely to be a permanent fixture. It has subsumed BT's operation in the Republic, BT Worldwide (Ireland), which has offered data services since 1996, into its operations. Competition, Mr McGrath says, has already made a difference "that people do not recognise". How many times, he asks, has Telecom Eireann dropped its prices in the past six months with "only the thought of competition". "The second thing is that we will offer real choice, and it is not just Ocean. Other players will offer real choice. You shop around with your pocket rather than from habit."

Ocean may be favoured by international companies and those who do a lot of foreign business. Calls to Britain at peak time, for example, are 13p a minute, compared to Telecom Eireann's which are 19p.

But Mr McGrath denies that residents will get passed over in all the jockeying for business. "There is no such thing as an ordinary resident. Every customer is different and every customer's calling requirements are different."

Telecom Eireann, currently going through a flotation process, was considered by BT as a venture partner for a while. But BT has stayed away from "incumbents" in EU countries as part of a strategy to be a major player in Europe.

Telecom Eireann, he says, is not commercially-orientated and will need to go through "a period of change". BT's staff numbers went from 240,000 to 120,000 in its transition, he says, while service improved.

He and his 98 staff have had a heartstopping time in establishing Ocean after the Minister for Public Enterprise, Ms O'Rourke, indicated on May 26th that she was bringing the process forward 13 months ahead of the EU's deadline of January 1st, 2000. "All of a sudden all hell broke loose . . . We had not signed the joint venture agreement between the two partners."

His wife, Maire, will "go bananas", he says, if she hears how many hours a day he works - "anything between 12 and 13 hours".

"What we have done in reality, in the last five months, is, we have built a brand new telecom company. That has never been done before." He still has not decided where home now is, after leaving his wife in their Belfast home to get an apartment in Dublin last March. "It's a bloody good question. I am not quite sure, I seem to have two homes."

He enjoys walking and finds Dublin "lovely" in this regard. "It is a big city but it is small in lots of ways." Ocean is 50 per cent owned by BT. The 50 per cent shareholding held by ESB International Telecommunications, is divided 60:40 by the ESB and American International Group (AIG), giving the US insurance and financial services company a de facto 20 per cent stake in the overall venture.

Mr McGrath says Ocean is now receiving 350 calls on average a day and has launched a national advertising campaign. It will invest £80 million in networking and systems.

He recalls that his mother was a district nurse midwife which was an added reason for the family to have a telephone. "It was in the hall so people could see that you had it," he remembers, "the coldest, draughtiest part of the house."

It's been a long road from when he started his career as a clerical officer in the transport side of General Post Office in London in 1964. Four years later, he switched to computers, which, in those days, was a 64k machine that "took a room the size of a house".

He moved back to Belfast in 1973 to work in personnel, and become a human resources manager. He was a contemporary of Alfie Kane, the chief executive of Telecom Eireann. He next moved to finance, working on budgets and contracts before he took on responsibility for billing, making sure customers were "harried" when loath to pay up.

"My career was so diverse in terms of computing, HR, finance, commerce, that at the end of the day I was such a generalist I became a businessman automatically," he says.

Competition in the telecoms market arrived in the North in 1981, although the pace was somewhat gentle at the beginning. For seven years, he describes the scene as a duopoly made up of BT and Mercury. He began looking to the Republic for business even before he became general manager of BT Worldwide Ireland.

"As you see competition coming in, you look at where can you make up the shortfall of income from the competition," he says.

As the head of a new company he sees no conflict of interest with BT. His mission is to make sure that Ocean succeeds and, in fact, the company has serious leverage in the North through BT who are "pretty strong partners". "I see the island as one economy, an island with 5.5 million people. There are natural synergies.

"If you have a customer in Dublin who wants to do business in the North, I know the levers to be pulled or the contacts to be made."