Broadband battle hots up

Carphone warehouse lost £72m in free broadband launch

The launch of a free broadband service contributed to mobile phone retailer Carphone Warehouse’s losses of more than £72m last year.

But the TalkTalk package ­ which bundles high-speed internet access with fixed and mobile phone calls ­ has picked up 655,000 customers so far, and Carphone Warehouse says it sees the launch as a success.

TalkTalk is part of a rising trend which could spell the end of broadband-only suppliers, says Butler Group analyst Mark Blowers.

‘Many companies are now looking to bundle internet access with telecommunication or TV services,’ said Blowers.

Customers like the approach because it gives them a single point of contact and bill, he says.

Communications firms are not the only ones taking on the broadband market. Satellite giant BskyB now offers web access with its TV channels, and scooped up more than 30 per cent of all new broadband connections in the first quarter of the year.

As growth slows, suppliers offering broadband on its own will have to target niche customer requirements such as home businesses needing it kept separate from other services, says Blowers.

The changes could cause problems for the Post Office, which has just signed a £750m, four-year deal with BT Wholesale to re-sell its broadband service.

‘The Post Office will struggle to attract a critical mass of customers because firms such as Carphone Warehouse have already attracted a large proportion of the market,’ said Blowers.