Free Broaadband

CARPHONE WAREHOUSE will this week launch a land grab on the broadband market that will provoke a price war for high-speed internet access, and could lift the company into the FTSE 100.
The company, increasingly moving beyond its roots as a mobile-phone retailer, is expected to offer “free” broadband as part of a bundle with its Talk Talk landline service.
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The promotion, which will be backed by extensive advertising, is intended to build on Carphone Warehouse’s ambition to establish Talk Talk as the leading consumer alternative to BT Group. At present, Carphone has only about 75,000 broadband customers, trailing far behind BT Retail with 2.3m and NTL, which has more than 2.8m after its recent acquisition of Telewest.
Until now, Carphone has been hampered by having to resell BT’s wholesale broadband product. However, it is investing £60m to install its own broadband equipment in up to 1,000 BT exchanges, allowing it to reach perhaps 70% of the population.
This move — known as local-loop unbundling — will give Carphone much more control of the speed, price and service standards of the broadband products it is able to offer.
BT is currently constrained in its ability to respond to Carphone’s challenge. Until 1.5m local loops (or lines) are unbundled, BT will remain subject to price controls imposed by Ofcom, the industry regulator. At present, only about 300,000 local loops have been unbundled, the overwhelming majority of them in the past six months.

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