Eircell Vodafone will announce price cuts of more than 20 per cent for prepaid mobile phone users later this month in a promotion to drive sales of mobile phones over Christmas. More than one million users of Eircell's Ready to Go service will benefit, according to Eircell Vodafone's new chief executive, Mr Paul Donovan.
In his first interview since taking up the reins at Eircell Vodafone, Mr Donovan also told The Irish Times that he would listen extremely carefully to customers following the recent publication of a report that strongly criticised the high prices and poor service provided by the Republic's mobile phone companies.
"Of course we have taken their comments very seriously and we are examining how we can improve the services we deliver in terms of customer service, network quality and the investment that we are making," he said.
However, Mr Donovan also described the report by the Telecommunications Users Group (TUG) as "not really representative nor highly quantitative on a statistical basis".
The TUG report claimed that two-thirds of business users found mobile phone services were inconsistent and uneven while 50 per cent said call costs were too high.
Eircell's Christmas promotion offer will be an opt-in scheme rather than an across-the-board cut. The scheme works in a similar way to its recently introduced "options scheme" for contract users.
The new scheme will continue to offer discounts after the Christmas period.
Mr Donovan denied criticism that the firm's price structures were not transparent. He said they were specifically designed to meet the needs of customers with different usage patterns. "Meteor entered this marketplace saying it was too complex and they would have simple price plans," said Mr Donovan. "Over the last few weeks we've heard them saying they will consider introducing peak and off-peak charges, and more pricing plans into their portfolio. The reason they are doing that is recognising that one size does not fit all."
Mr Donovan said a significant number of contract customers had migrated to Eircell's new options package. However, he said the exact number was a matter of "commercial confidence".
Eircell is pursuing the industry trend of aiming to maximise average revenue per user rather than attracting new customers, according to Mr Donovan. "We have a programme which we run in the business from volume to value," he said. "That means, as we get to the final stage of market evolution, you have a situation where not all new customers are of equal value. It is natural to focus on the business and high-value customers," he said.
However, this may prove difficult for Eircell where 71 per cent of subscribers are prepaid mobile users, who change networks more easily than contract customers.
However, Mr Donovan said Eircell had begun several initiatives to create more value from customers including reducing subsidies on mobile phones and introducing expiry times on certain top up options. This means customers who buy a £5 (€6.35) top-up card will have to use it within 15 days, or they will have they top up again to use their phones.
Eircell will introduce the industry's latest range of high-speed internet phones that use general packet radio services (GPRS) technology in January, said Mr Donovan.
GPRS technology is packet-based and offers users an "always on" connection to mobile internet services at speeds significantly faster than those already available.
Mr Donovan said the delayed launch in the Republic was not due to lower competition in the domestic marketplace than the UK. Mr Donovan moved to dampen expectations of a speedy introduction of third-generation (3G) mobile technology, which would enable people to receive video clips and multimedia on mobile devices.
"I think it is fundamentally important when thinking about third-generation technology not to regard it as something brand new and fundamentally different - it isn't," said Mr Donovan.
"Some applications will benefit from the extra bandwidth that 3G brings but a good proportion of them will not be dependent on the introduction of 3G."
Inter-roaming will be necessary between those two technologies as 3G technology will not be a mirror of existing mobile networks and some areas will not have it, according to Mr Donovan.
He said Eircell would like to see clarity on the issue of the licence fee that will be charged for 3G mobile licences.
This is the subject of a year-long dispute between the Minister for Finance, Mr McCreevy, and the telecoms regulator, Ms Etain Doyle. The Republic will now be the last EU State to award the licences.