Carphone Warehouse subsidiary Talk Talk yesterday revealed details about its hotly anticipated "free" broadband internet service, setting off widespread - and probably justified - talk of a broadband and telecoms price war.
Somewhat surprisingly, the service - which goes live at the beginning of July but is available to sign-up to right now - really is free, apart from a £29.99 connection charge that also covers the cost of a USB ADSL modem.
The deal is said to offer download speeds of up to 8Megabits per second along with 15MB of web storage, five email addresses and a monthly download limit of 40GB that's governed by Talk Talk's " fair-usage policy".
There is, of course, one significant gotcha (ain't there always?) - the service is only free for subscribers to Talk Talk's landline phone service, Talk 3 International. And that will cost £20.99 per month - £9.99 for a subscription and £11 for line rental - and involve a minimum 18-month contract. On the plus side, the bulk of phone calls for many subscribers will be free, whether to the UK or abroad.
The fair-usage policy is said to restrict "high bandwidth activity in peak hours to allow the majority of customers to use their broadband connection for normal residential usage". In that list, Talk Talk includes surfing, email and online gaming but not excessive use of peer-to-peer file-sharing. And, presumably, the download speeds available during peak hours - defined, rather perversely, as 8am to midnight - are going to be considerably less than the headline figure of 8Mbps.
Talk Talk says it's unlikely to do anything when someone does occasionally have very high usage but may "restrict the general internet service" of people whose usage remains excessive. As a last resort, the company will, it says, suspend the service and possibly shut down the account altogether.
Free landline calls
The landline phone side of the Talk3 International service will look rather appealing to anyone who spends a lot time on the phone, especially if they regularly call abroad. Day or night, Talk3 International will offer an unlimited number of 70-minute calls free to UK landlines with numbers starting 01 and 02 and to landlines in 28 countries. And yes, it is okay to hang up and ring again to get another free call to the same number. Calls are not free to numbers beginning with 0845, 0870 or 0840, nor to premium-rate lines.
Among the free international destinations are the rest of the EU, plus Australia, Canada, Cyprus, Malta, New Zealand and the USA. Calls to Jersey or Guernsey aren't free, though, and, irritatingly, it will be necessary to dial 18418 before international numbers.
Talk Talk says that, like all its phone deals, Talk3 International is structured in the same way as the BT equivalent - to make it easy to compare prices. That, though, doesn't necessarily make it easy to compare with the prices of other operators, such as NTL, though Talk Talk does have a comparisions' web page that does that for a couple of the higher-charging companies, AOL and Wandadoo, as well as BT.
Click for close upThe company also offers what it calls the £1,000 Challenge, in which it promises to give subscribers a grand if it can't prove that their bills are cheaper with Talk Talk than they would have been with BT. As you've probably guessed, though, no other phone supplier is included in this challenge. And there are "conditions".
As well as a USB broadband modem (and installation CD), Talk Talk will supply subscribers with a pair of ADSL microfilters and an ADSL telephone cable. It will be possible to connect more than one PC to the internet but this would mean buying a suitable combined router/modem to use in place of the supplied USB modem. Talk Talk offers a selection of routers to buy online and says that routers can also be bought from most Carphone Warehouse stores.
Peer-to-peer activity will be restricted in peak hours but the company says, without explaining how, that it will allow "a greater proportion of P2P traffic" between midnight and 8am.
Local-loop unbundling
Central to the company's plans is local-loop unbundling - the installation in BT exchanges of its own exchange equipment. This will make its phone and broadband customers independent of BT. The initial target is for 1,000 unbundled exchanges - reaching just under 70 per cent of UK households - and this is predicted to be met by May 2007.
Customers whose local exchanges don't carry TalkTalk's unbundling connections will initially be connected via BT’s wholesale IP Stream service and pay their £11 line rental charge to BT rather than Talk Talk. Later migration to Talk Talk's own hardware will be free, the company says.
Commenting on its move, Charles Dunstone, CEO of Carphone Warehouse, 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 per cent 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.
Targets
Carphone Warehouse claims to currently have around 2.6 million residential voice customers in the UK under the TalkTalk brand and says it aims to increase that figure to 3.5 million by March 2009, half of them with combined voice and broadband accounts.
In the current financial year to March 2007, it expects to invest around £110m to support its strategy, resulting in an operating loss of around £50 million from its broadband business. However, it's expecting to quickly return out of the red. The next financial year will, it's predicting, see an operating profit of £30-£40m and for the company to be "free cash flow positive", with a "a total cash payback" on its investment taking place in the fourth year - ending March 2009.
So, as the old cliches have it, "Let battle commence" and "May the best man win".
And, as always, let us have your thoughts about this news over in the HEXUS.community, especially if you reckon you know of deals that rival or better what's being offered by Talk Talk or if you can see some big flaw in the deal.
HEXUS.links
Free broadband rumours - HEXUS.lifestyle
Talk Talk - Talk 3 International home
Talk Talk - Package-deal price-comparison page
Talk Talk - International phone-call prices
Talk Talk - Call-tarrif document (PDF)
Talk Talk - "Fair-usage policy"
Talk Talk - £1,000 Challenge
Talk Talk - Router shop
Carphone Warehouse - launch press release
