The Free Lunch Has Landed

Carphone Warehouse finally announced its pricing strategy for broadband and residential telephony in the first 1,000 exchanges it has committed to unbundle, and the financial impact of this strategy.

For a monthly fee of £9.99, TalkTalk customers will receive:
• Unlimited local and national landline calls, 24 hours a day
• Unlimited international landline calls to 28 countries, 24 hours a day
• Up to 8 Mbps broadband access

This offer is available to all customers in all 1,000 exchange areas, covering nearly 70% of the UK population. If the local exchange has not yet been unbundled, the customer will initially be connected via BT’s wholesale IP Stream service, and then migrated at a later date at no extra cost to them. The first customers will go live from the beginning of July 2006.

In addition to the monthly fee, all customers will pay the standard monthly line rental charge of £11.00.

CPW said, “To support this strategy and to generate a more rapid payback on our investment, we intend to deploy our exchange infrastructure as quickly as possible. Based on current forecasts, we expect to reach our initial target of 1,000 exchanges by May 2007. In addition, we will invest substantially in marketing and customer acquisition.

Charles Dunstone, Chief Executive Officer, said: “Our approach to business has always been about how little we can afford to charge our customers, rather than how much we can get away with. So today we are cutting more than 60% off the cost of the average UK residential telephony and broadband bill, and additionally providing unlimited calls to 28 international destinations. The residential telecoms market in the UK will never be the same again. From today, broadband is a right, not a privilege.”

BT Respond:

A spokesman for BT said, “There’s no such thing as a free lunch. People have to look at the small print. At the moment more customers choose us over any other broadband provider in the U.K. Whereas Carphone has to show it can offer broadband on a large scale we already have 2.3 million customers. Carphone has 75,000. There’s a lot to prove.”