The Friday interview: Dara O’Mahony, Dome Telecom

23 Jan 2004

While large well-funded telecom firms with big legal budgets wage a bitter war of attrition against one another for the hearts – and pockets – of the Irish consumer and business, a young ‘white label’ provider of phone cards and internet access services is discovering fresh and vibrant new markets at home and overseas through a mixture of cunning and good old-fashioned R&D.

Dublin-based telecoms company Dome Telecom has been thinking outside the box and as a result has discovered niche markets in supplying telecoms and internet services to Irish and overseas consumers.

The company’s telecom cards can be discovered in almost every news agent in the country in the form of ‘white label’ prepaid phone cards for organisations such as Budget Travel and An Post. As well as this Dome has embarked on providing phone and internet services to what it terms ‘non-geographic’ customers in the form of hospital patients and tourists and backpackers staying in Irish youth hostels. In addition, the company has started to provide internet kiosk services to backbackers as part of a deal with a number of prominent youth and holiday hostels.

“We realise that as a small independent player we can’t compete with Eircom in terms of infrastructure so what we have done is take an ADSL line from Eircom for €40 a month and repackage the service in such a way that Dome Telecom can make revenues of €400 a month from a single line,” says Dome Telecom managing director and founder Dara O’Mahony.

Established in April 2000, Dome Telecom is Ireland’s largest provider of prepaid telephone services. The company has spent more than €2m in the past two years in researching and developing products and services and makes a turnover of around €3m annually. A fully licensed telecoms company, Dome offers a range of international calling cards, including the brands Century 2000, Pulse, Global Caller and Century World. Dome Telecom’s products are available from more than 7,500 retail outlets in Ireland through its distribution agreement with An Post, Alphyra, Easons Electronic and through its network of vending machines.

In addition to its phone card business, Dome Telecom owns and operates a network of low-cost international payphones.

In recent months the company has been working to roll out internet services at An Oige, Independent Holiday Hostels and the Kinlay youth hostels by establishing ADSL-based web kiosks in major hostels. However, according to O’Mahony, the rollout has been hindered by the delays in providing ADSL technology to hostels in Galway and Killarney.

As well as the hostels, the company has been rolling out bedside swipe card phone services at hospitals across Ireland, including Holles Street Maternity, Wexford General and the National Orthopaedic Hospital in Dublin.

Before last Christmas, the company secured a deal with the Defence Forces whereby Irish Army satellite communications were used in such a way that troops were able to obtain phone calls that typically cost €7 a minute from the African state of Liberia for around five cents a minute instead. Irish soldiers on UN duty in Liberia were able to buy 36-minute phone cards from behind the bar in their bases in Liberia and call home explains O’Mahony.

“We worked with the Defence Forces to split off a few channels on the main satellite link that beams the signal into Dublin and treat their calls as if they were generated in Ireland.

“There are only some 6,700 telephone lines in Liberia so as you would imagine calling home would have been nearly impossible for the soldiers”, says O’Mahony. As well as being able to buy the cards, every soldier based in Liberia was given 36 minutes for free to call home over the Christmas period. “The calls were restricted to landline numbers in Ireland only as mobile calls would have completely absorbed the value on the cards,” O’Mahony explains.

According to O’Mahony, other nations’ armies based in Liberia under the UN have begun to take an interest in the service. “The Swedish army in particular, which is working closely alongside the Irish troops, has expressed an interest in the service having seen the Irish troops make use of the phone cards. As part of the deal with the Defence Forces, we have established a number of booths inside the Irish bases as part of the ‘welfare time’ services made available to troops on duty.”

O’Mahony believes that there is a significant opportunity to make such services available to other UN missions around the world. “For example, we have established dollar-based card vending machine at Shannon Airport for the US troops passing through,” he elaborates.

On home turf, however, O’Mahony has concerns. He believes that as a small player in the Irish telecoms business the market is restrictive and the Commission for Communications Regulation (ComReg) has shown little inclination to stand up to incumbent operator Eircom. “I still think it [the Irish telecoms market] is a negative environment. The regulatory authority hasn’t enough teeth. In terms of the powers it has or the way it uses them. I don’t think there is enough determination at ComReg to support indigenous telcos. They should be asking ‘how can we help you’ as opposed to dealing with the fire fighting of issues. The office should be on the side of the small operator with a competitive offering in the market. Instead, the guys with the biggest legal budget are getting all the attention. The regulator needs more teeth or to use the teeth it has in a sufficient way.

“When I worked for Esat in 1997, we saw how real the and frightening the scenario could be and how easy it would be for an incumbent to bring down call costs and increase line rental. I think the telecoms regulator needs more power,” he says, referring to the recent price hike, the third such price hike in a calendar year, by Eircom that was oddly given the go-ahead by ComReg.

Despite the market restrictions, O’Mahony has plenty of cause to feel optimistic as his company strikes out to capture virgin territory largely ignored by the larger players in the marketplace. “We don’t see ourselves as purely a prepaid provider, but more into serving non-geographic customers with phone and internet services. These are people who occupy hospital beds, overseas visitors, people who are not at their desks or at home; basically non-geographic customers. We will always buy an ADSL line off Eircom, but only because we know we can serve 5,000 backpackers who want to be connected to the internet. We can’t compete with the level of investment that Eircom and others can put in. Instead we’ll take their €40 a month ADSL offering and turn that into €400 a month revenue for us and that’s where the market will go. We start with the customer and work our way back. There’s a bit of a Ryanair side to us. If you start with the customer and work your way back you are always going to be profitable.”

He adds: “We reinvest everything at the moment in the business, but we remain profitable. €2m goes back into product development. Effectively it goes into bolting together simple things that make money. We try to connect with existing and future customers and ask them what they want in terms of products and services. Our R&D investment is significant. About 20pc of the whole company is engaged in product development.”

Despite this healthy approach to R&D that could be pursued by other small businesses in the Irish market, O’Mahony has a very low-tech outlook on life… his favourite piece of technology is his bicycle. “That’s because I don’t have to worry about upgrades. I use my PC every day, I have my iPaq, a DVD player and sound system, but it is easy to take them all for granted. My bicycle has never gone obsolete,” he concludes.

By John Kennedy