It's hear, here - and everywhere

Mobile phones are no longer expensive toys for yuppies or fashion accessories for ladies who lunch. They are now almost an essential part of life for both business and personal use. Such has been the growth in the market over the past few years that there are now about half a million people walking around with mobile phones in their pockets. That translates into an "official" market penetration of somewhat less than 20 per cent - but when it is considered that there are only 1.3 million fixed line telephone accounts in the country, the figure comes into sharp perspective.

Clearly, the biggest story of the last year has been the launch and outstanding success of Esat Digifone. The service was launched on March 22 last and, despite some teething problems, which included a £1 million fine for a delay in bringing the system on stream, the company has captured 20 per cent of the market in just nine months and now has about 100,000 customers.

Of course, the overall growth in the market has been little short of astonishing. The market has experienced 80 per cent growth in 1997 alone - bringing numbers from less than 300,000 to 500,000 - and the two main players, Esat Digifone and Eircell, are agreed that this will grow by about a further 200,000 during 1998.

This growth has not come without its own cost, however. The way the mobile telephone system works is through a series of interconnecting "cells" which surround each transceiver station. However, the more people using a cell at any one time, the poorer the reception. So, with the amazing growth in mobile phone usage, the networks have struggled to keep pace.

"It is a challenge for any start-up operation to cope with growth," says Barry Maloney, chief executive of Esat Digifone. "But I believe we have differentiated our service in terms of quality and simplicity of pricing. We have two easy to understand rates - Digimax and Digilite. High users have continuously reducing costs the more the use their phone with Digimax, and less frequent users get £5 worth of calls each month included in their £20 rental and any unused portion of this credit is carried forward to the following month.

"We also offer a comprehensive package of service to our customers, particularly in the data area", he continues. "One of our services, for example, is fax receipt. Our customers can receive a fax into their message mailbox and then forward the fax to the number of the nearest fax machine.

"That means, if they are away from their office, it could be a hotel reception or a filling station, or whatever. Even if people don't own a fax machine, this service is useful - they can receive the fax on their mobile and then forward it to a friend's machine."

The UK experienced massive market growth in the late eighties but there was a high "churn" factor associated with it. In other words, people were getting telephones at ridiculously cheap prices and using them for a few months, not paying the bill and getting cut off. This hasn't been a factor in the Irish market, according the Maloney.

"There hasn't been a lot of churning here," he says. "We have stayed away from the `free phone syndrome' and we won't focus on that end of the market. We want the quality end of the market. All you're doing is racking up customer numbers otherwise. That doesn't do anyone any good."

While Digifone has been making the headlines, Eircell has had a very good year as well. When Stephen Brewer took over as chief executive two years ago, the company had 98,000 customers. Today it has 400,000. The company has also added about 70,000 new customers with its new "Ready to Go" product.

"This is aimed at people who wouldn't normally use a mobile phone because they don't want the hassle of signing contracts and so on," says Stephen Brewer. "For one price they get a telephone, a connection and a number of pre-paid calls. Whenever they want more calls they pay for them - no unexpected bills and so on. This has proved outstandingly popular.

"We have also been growing our customer base by offering a better range of services and reducing our prices," he adds. "We have the best deal around in terms of cost of ownership now."

Eircell has come in for a bit of a battering due to complaints about poor network coverage and so on, however. "You will always get criticism and we are prepared to live with it", says Brewer. "We have pioneered the growth in the market. You can't please all of the people all the time, but we try to and do please most of the people most of the time. We have created a phenomenon here. I have been in this business for more than ten years in the UK and France as well as here, and there never been anything like the growth in this market."

By the end of next year, or early in 1999, a third operator will have come on stream, injecting further competition into the marketplace. Both companies are prepared for it, however. "By the time the new operator is up and running Digifone will be well established in the market and we will be ready to take on any competition," says Barry Maloney.

"We'll make sure that Eircell is offering the most competitive service in the marketplace," says Brewer. "I'm a competitor and we will be ready for anything."