I think my titling the thread "Faction Chat..." may be a little misleading, since it is not faction specific chat that I'm asking for but a chat that is heard by all friendlies in a match i.e. all people on Blue. I used the term "Faction Chat" because I couldn't think of a better way of describing it at the time, since "Team Chat" isn't right either.
There have been some interesting suggestions put forward, such as auto teaming etc but to my mind they would all require extra work from the devs than my suggestion (not saying those suggestions are bad, just that the devs clearly don't have much spare time, so lets go with the simplest solution). For instance, auto teaming everyone on Blue could not currently work as a team cannot currently include members from different factions (which can happen in a PvP challenge match), so to make auto teaming work, the devs would first have to change the team restrictions = additional work load.
What I am suggesting, should be fairly quick to implement (only Cryptic can say for sure) as it seems to me the mechanics to do what I am suggesting already are in use in the game. Allow me to explain.
Point #1. The system must currently keep track of whether any particular player is assigned to Red or Blue squad (not using the word "team" to avoid confusion with player formed teams). It must be doing this to be able to set friend / enemy status and can't be basing that decision on faction as FvF or KvK would not work if it did.
Point #2. The Chat system must be able to filter the multitude of chat generated according to various flags. It must be doing this because I can type into "my" Team Chat and people teamed with me can hear it but someone who is part of another team in the same instance cannot. Similarly, that player on the other team can type into "his" Team Chat and be heard by his team members but not me. The game is filtering the chat channel according to the team you are flagged as being a part of.
Point #3. It would also appear that the "Local" chat channel is pointless in a PvP match, since it replicates "Zone" chat when on a PvP map. Additionally, the "Local" chat channel has the filtering technology described in point #2, as in a non PvP map, it can filter our chat from other instances.
So, if the game can filter chat based on a team or other flag being set and has a flag indicating whether you are on Blue or Red squad, it must be reasonably straight forward to ask it to filter chat based on your "squad" flag (i.e. Blue or Red). Since we know "Local" chat can be filtered and that the "Local" chat channel already exists in game and is largely redundant in a PvP match (see point #3), it makes sense to use it for our desired channel (no extra channels to create=less dev work).
So you see, everything required to do what I am suggesting is already happening in game, the mechanics already exist and work. I'm simply asking to add them all together, as reusing existing tried and tested game mechanics must be much easier / quicker for the devs than building new mechanics to auto team or create new chat types. Their time is limited, so if we can get worthwhile functionality from a small amount of their time, it makes sense to do so rather than ask them to devote more time to finding another way to achieve the same result.