A technology blog for The Economist Group IT team

Wednesday, April 12, 2006

TalkTalk gives free click clicks 

Charles Dunstone's Carphone Warehouse subsidiary, TalkTalk has thrown down the gaunlet to broadband suppliers by offering an 8Mb/s service with a monthly 40GB limit for free with it's Talk3 International plan. Line rental is payable to Talk Talk at the same price (£11 per month) as BT and the call plan costs £9.99 per month. Fo that you get "free" calls to UK numbers (except to non-geographic numbers or for call durations of more than 70 minutes) as well as to the US, Australia, Canada and Europe. Calls between TalkTalk mobiles and landlines are also "free".

So what's the catch? Well, your exchange has to be one of the 1,000 in the UK that TalkTalk reckons will cover 70% of the population. You also need to be close enough to the exchange to get DSL, as always.

Initially, at least, it seems that TalkTalk will not be completely "unbundling" all these exchanges, which would mean putting their own equipment in, but will instead be taking over the local loop (the bit of wire from the exchange to your house) and using BT's Wholesale IPstream service for internet access. Customers will then be migrated to the unbundled service as TalkTalk install their own equipment.

The other catch is the one that Bulldog customers have seen - when demand outstrips the service capabilities of a provider it leads to a really poor experience. Added to this, swithcing back to your previous provider is less smooth than the switch away with likely interruption to broadband service. There's also some ominous small print that says that you may have to pay a cancellation charge if you decide to cancel because the connection of broadband takes a "long time" after the date that you're originally given.

The wholesale cost of a fully unbundled line is £7.83 per month; the cost of installing and running DSL equipment and supporting and selling the service needs to come out of the remaining £13.16. That seems like a pretty small margin when you consider that the charge for moving to an unbundled service is subsidised by TalkTalk to the tune of £70 (hence the 18 month contract). TalkTalk will also have to pay BT the wholesale cost of the DSL service until they unbundle the line completely.

I suggest that you balance the potential savings with possible disruption to your service and wait a few months to see how the roll out goes. I may not be able to resist, though!
I'd love to at least ponder switching to Talk Talk for the free broadband. However I don't like the download limits and The Register has mentioned many times on how fair usage policies are often abused by large companies who slow heavy bandwidth people down without telling then.
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