Carphone looks to clear service backlog

24 Apr 2007

Carphone Warehouse, the UK’s third-largest provider of high speed internet access, has admitted that it will be at least October before it clears a backlog of 260,000 loss making “free” broadband customers. Charles Dunstone, Carphone’s chief executive, said in an interview with the Financial Times that it could take until the end of 2007 to solve the problem, and pinned the blame on BT. However, Carphone claims it can compensate for the losses by expanding the reach of its telecoms network, enabling it to recruit more profitable customers than originally planned. Carphone also announced it would make a big push into the US mobile phone retail market. Carphone’s joint venture with Best Buy, the US retailer, will open 150-200 stores across the States, following successful trials in New York.

Carphone unleashed a broadband price war in April last year by offering ‘free’ broadband to customers who signed up to its GBP21 per month fixed line Talk Talk phone service. Carphone estimates it makes a loss of GBP5 per Talk Talk customer per month while they get their phone and broadband service through wholesale products the company buys from BT. The customers only become profitable when they are connected to Carphone’s telecoms network. That switch has been delayed for thousands of customers. Mr Dunstone strongly criticised BT Openreach, the former state monopoly’s division that is responsible for connecting the customers to Carphone’s network. He said he was the ‘victim’ of Openreach’s failure. Carphone is reported to have installed its own equipment in 1,000 of BT’s phone exchanges; a further 500 are planned, which will boost its coverage to 90% of the UK population.

United Kingdom, TalkTalk