For Subscribers

Get the complete article now!

TWST: Can we start with an introduction to Telegate (DE:511880)?

Mr. Eimer: I will tell you a little bit about how we arrived at Telegate, Inc. It began somewhere in 1999. Telegate, after going public in Germany, decided to bring that successful idea of competitive Directory Assistance (DA) service to other countries, mainly to key European countries and into the US. At that time, in the US there was nothing known about that type of competition with different short codes. The whole DA service was an oligopoly in the hands of the carriers -- all the different RBOCs and carriers had their own DA service. But of course, from a consumer’s standpoint there was no choice because whatever carrier they were with there was just that one access code and that one DA service. So that was clearly a starting point for Telegate to say, okay there is a chance for the US market to go a similar way as Germany. They started with a regulatory approach and in fact the first Telegate employee in the US was located in Washington, DC and was working on the lobbying side. That was then followed in early 2000 by the foundation of Telegate, Inc. Initially, there were plans to build two new call centers but that was downsized to one new call center. Then, in parallel was the purchase of the DA arm and subsidiary of an independent telephone company in the US with three call centers in Virginia. So by the end of 2000 the company was really starting to grow on its own and had three running call centers and one in the build-out phase. However, the market was still not deregulated, so with those call centers we were just serving as an outsourcing provider to carriers that didn’t want to run their own DA operations. Initially, the whole deregulation approach looked very promising, but that turned out to be a very long road to go down. In the US with all those different state regulatory authorities and with many strong incumbent carriers, like all the RBOCs and long distance carriers, this whole process soon turned out to be much slower than originally anticipated. It all got somehow delayed with filings back and forth. The point we are now at is that we have realized that a deregulation in a more or less European model, i.e. with independent access codes for independent providers, will be at least another two years away. Some of the European countries were much faster such as the UK, which has finalized deregulation and they are ready to go in early 2003. Telegate is in the UK also, but in the US we had to reconsider our whole strategy and really focus on the outsourcing business to further sustain ourselves in that market for a certain time. We had to consolidate the business somehow. We are serving carriers and corporate customers to generate our profits and revenues here in the US at the moment.

TWST: What will be the direction the company takes over the next two years and what milestones will you look to reach?

Mr. Eimer: On the one hand, we still want to be ready for a deregulation of the market. Once that takes place with independent access code that will require a huge amount of money for marketing, for the buildup of operations; but it will also require solid experience in the DA market, how to operate centers, how to run call centers, how to serve customers with professional and efficient service. So in that sense we are ready for that once this happens. Of course, Telegate would be highly interested in a financial partner to invest and grow that business then very quickly.