TALLINN - Competition in the fixed-line phone market is poised to get tougher as Starman, Estonia's largest cable TV and cable Internet provider, began offering its clients fixed-line telephony services starting Feb. 1.
The main attraction for consumers will be free calls within Starman's network, which currently covers nearly 200,000 households, or one-third of Estonia, and cheaper per-minute fees for calling to any other domestic network, including Elion.
What's more, for the first three or four months only the per-minute fee will be charged, after which clients will have to pay the monthly fee of 79 kroons (5 euros).
Starman officials said they would first target their nearly 18,000 broadband Internet users by replacing, for free, cable modems with devices equipped with two regular phone sockets.
Starman CEO Peeter Kern admitted, however, that the phone service would aim at poaching Elion's extensive clients.
"People who have given up fixed-line phones for mobile phones or the Internet will not come back anyway," he said. "However, fixed telephone calls are still 10 times cheaper compared to mobile ones, and this price level will likely stay the same for some time."
Kern stressed that the situation on the fixed-line market has been grotesque from the point of view of consumers. "While people could formally change phone companies they still had to pay monthly fee to Elion because neither Uninet nor Tele2 nor smaller companies have had their own network," he said.
According to Kern, Starman spent about 638,000 euros on the telephone service equipment.
The VoIP-based service (voice-over Internet protocol) will come by the same cable Starman uses for TV and the Internet.
Ekke Einberg, Starman's phone services project manager, said the company's telephone service would have a separate, priority band in the underground cable and would not be affected by potential TV or Internet service failures.
Starman's services are now available in 17 towns and county districts including Tallinn, Tartu and Viljandi.
"We target bigger places - apartment-housing districts and offices. It is too expensive to built the network in a district of private houses," said Kern.
Estonia's fixed line telephony market was deregulated in 2001, and a number of different providers have appeared. Although the National Commun-ications Board has registered Starman as a fixed-line telephony provider, the interconnection agreement with Elion is yet to be signed. Kern said that could be done in six months, and until that Starman will use a third-company service to reroute calls from Starman to Elion networks.
Ain Parmas, spokesman for Elion, said Starman's phone service would not represent a threat to Elion due to Starman's relatively small clientele.