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Taking Advantage of 'Last Mile' of Network

Posted on: Wednesday, 16 March 2005, 12:00 CST

It is only 12 years since Jamie Hughes and his father Peter set up their own business with pounds 50 and a second-hand fax machine. Now their sights are set on becoming BT's fiercest rival in the market for telecommunications for small and medium-sized enterprises.

Their company, Pace Telecom, has already shown its serious intent, growing rapidly in recent years. And that was before recent deregulation of the vital 'last mile' in the telephone network, where BT has remained dominant despite previous deregulation.

Mr Hughes and his father were both working for a photocopier company when they took the radical decision to set up in business. They began by selling photocopiers from their Wrexham home, followed by mobile phones. But the mobiles market was quickly becoming saturated and in 1997 the pair decided to specialise in selling fixed-line telecoms.

Although there has been talk for many years that mobile telephony is the future, Mr Hughes said there would continue to be huge demand for fixed telephony among SMEs. 'Developments in the fixed-line marketplace will gather pace,' he said.

One such development which is now coming to fruition is voice- over IP - using the internet to make phone calls, with the option of video conferencing. That will dramatically cut the cost of calls for businesses with always-open broadband internet connections.

Potentially that could spell trouble for one of Pace Telecom's three main activities - providing complete telecoms service packages. It works with Vodafone and others to provide cost- effective tariffs tailored to each client's needs.

'To most companies in our position, voice-over IP would be a major threat,' said Mr Hughes.

'We've turned it into an opportunity. We've got a strategy for improving revenue using this new technology. We're not going to turn people away from it - we will be advocating it.'

Another major area for Pace Telecom is equipping customers' premises with comprehensive telecoms systems, including email, internet and video-conferencing.

The third main area of business is providing a variety of links to telecoms networks - perhaps a mixture of analogue phone lines, ISDN and broadband. The exact combination is designed around the client's activities.

The company, based in Gresford, Wrexham, now has a turnover of about pounds 10m. It employs nearly 50 people, a figure likely to rise this year.

Managers or potential managers attend courses at the North-East Wales Institute (Newi), and management consultants routinely provide training in-house.

Pace Telecom also sends staff on industry-related training courses on subjects such as billing customers.

The company is considering Investors in People accreditation.

One of the main drivers of the company's rapid growth has been its partnering facility, where other companies sell telecoms packages put together by Pace Telecom and under their own company names.

The facility is comparable with a Chinese company being licensed by a major European car company to make identical cars.

Partnering has taken Pace Telecom products into new geographical areas. Its own clients are mainly in Wales, north and south, and North-West England, but its partner companies cover much of Britain from northern Scotland down to Dorset.

Acquisitions have also fuelled the company's growth. Mr Hughes expects to make further acquisitions this year, but is not prepared to buy companies for the sake of expansion.

Last year Pace Telecom considered a company in Kent but decided against acquisition.

Organic growth is as important as acquisition to Pace, and resting on laurels is not an option in such a fast-moving market.

Mr Hughes said, 'We're launching something to the industry at the telecoms con- ference in the middle of April.

It will take the market by storm.'

He and his father have considered the Alternative Investment Market but put the idea on ice because the climate was not particularly favourable to new entrants.

'We don't necessarily need an influx of cash to execute our plans,' he said.

'If things change, the business will be ready to float.'

Many entrepreneurs feel the itch to start a new venture after getting a new one off the ground, but Mr Hughes said no offer would make him part with Pace Telecom.

'We have approaches on a regular basis as to whether we want to sell. I'm not interested. I'm here to stay, however much anybody would want to pay for us, because we haven't started on our journey yet.

'I'm fortunate in that, with the business I'm in, there's always something new to keep us busy.

This business is reinventing itself every couple of years.

'That's keeping me interested.'

Source: Western Mail

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