Carphone Warehouse

Broadband Britain has become almost as big a political battleground as Broken Britain as the race for the upcoming election gathers steam. The Conservatives have unveiled plans to deliver “super-fast broadband” to the majority of UK homes by 2017, part of which could be funded by the BBC licence fee.

In yesterday’s Guardian, Shadow chancellor George Osborne said that an incoming Tory government would deliver speeds of up to 100Mbps and that the UK could be the first European country to have super-fast broadband speeds.

Private investment would be allowed to pay for better cabling for the broadband expansion and as a backup, the BBC - whose iPlayer has driven demand for faster broadband - has put aside 3.5% of the licence fee to fund the project.

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A lot has happened in the UK broadband market in 2009. Here’s a quick round up of the some of the big changes in broadband that have taken place over the last 12 months.

Tiscali gets bought by TalkTalk

Poor old Tiscali spent 2008 looking for a buyer without success and its woes continued into 2009. Despite many ISPs sniffing around hoping to steal a quick march on BT, nobody was willing to dig deep in their wallets. With deals collapsing at the last minute and its parent company losing millions of Euros on the continent times looked bleak for Tiscali’s UK arm. Then TalkTalk came to the rescue at the eleventh hour and swept Tiscali of it’s feet.

Speeding Up

2009 has seen a lot of speeding. BT, Orange and PlusNet all revved up their top download speeds to 20Mbps and 24Mbps in the case of Eclipse Internet. BT also released the Broadband Accelerator speed booster pack allowing customers to benefit from a more reliable broadband experience.

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TalkTalk is embarking on a promotional venture with a twist - literally putting money back into people’s pockets. The ISP has hired a gang of 20 former pickpockets to roam the streets of London and slip crisp notes between £5 and £20 into the pockets of unsuspecting residents. The notes come inside a TalkTalk branded card informing the targets of the so-called ‘Put-Pockets’ where the money came from.

The TalkTalk Put-Pockets are out in force now in London, and are said to be operating in Leicester Square, Oxford Circus, Covent Garden, Westminster, Trafalgar Square and The South Bank, as well as various stops on the Underground. The Put-Pockets will continue to operate in the capital until the end of August when they’ll pack up their bags and head out to other major cities in the UK.

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Virgin Media may have reopened old wounds with a recent letter campaign. Despite the cable carrier and Sky kissing and making up last November it seems like the gloves are off again.

In a bid to add more customers, Virgin Media recently sent letters to the homes of broadband customers in cabled streets, highlighting ten reasons why going cable is better than signing up with Sky.

The letter, signed off by Mark Davidson Executive Director of Customer Care for Virgin Media, underlines the benefits of cable over both copper phone lines and satellite, both of which are used to deliver Sky Broadband and TV respectively:

“You don’t need a dish or an aerial because Virgin TV comes down a fibre optic cable (bad weather can seriously effect your viewing with a dish.) … The same fibre optic cable brings you fast, future proof Virgin Broadband at up to 50Mb the UK’s fastest.”

The letter then goes on to mention some of the various bundle deals on offer: Virgin Media L Broadband (up to 10Mbps, unlimited downloads) comes bundled with unlimited UK weekend calls (01, 02 and 03 numbers) and the M+ Digital TV offering (60 channels, free Catch Up TV) for just £19.50 a month, with no additional free for installation or connection. The offer of free connection ends on the 31st of July.

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Despite broadband news this week being largely dominated by the Carphone Warehouse takeover of Tiscali, BT Broadband has just announced figures that reveal that it is still top dog in the UK broadband stakes.

The broadband provider BT claims that its customer base has increased to 4.8 million, keeping it head and shoulders above the competition. The Tiscali buyout saw Carphone Warehouse leapfrog Virgin Media into second place, with its customer base swelling to 4.25 million - impressive, but still not enough to pip the British Broadband crown from BT.

Today also saw the publication of Tiscali’s results for the last quarter, which saw the troubled company steadily losing subscribers right up until the deal with Carphone was done.

The figures released show that BT Vision now has 423,000 customers, up from 398,000 on the last quarter. Use of BT’s Openzone Wi-Fi minutes, amounts of which are bundled free with BT Broadband packages, has also increased by 80 per cent over the last 12 months.

Tiscali has just released its latest list of figures for the last quarter, which shows a steady decline in subscribers from nearly 1.76 million at the end of last year, to 1.7 million at the end of Q1 2009 (31st of March).

This news comes just a week after it was announced that TalkTalk and AOL owners Carphone Warehouse bought the UK arm of the Italian firm, which was struggling with debt repayments, for £263 million, £20 million of which went towards clearing debts, according to the press release found here (PDF).

It is thought that once the transaction is complete next month, Tiscali subscribers will be migrated to the TalkTalk network and be offered the basic TalkTalk Essentials service (8Mbps speeds, 40GB download limit, Evening & Weekend calls) as standard.

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It’s a bit short of and decidedly less tasty than Heinz’s famous 57 Varieties, but ISP TalkTalk has just launched a list of 47 Reasons why you should sign up for its broadband and phone services.

Some of the listed 47 Reasons include:

• Fantastically low cost calls

• Free wireless router

• Min 40GB monthly usage limit

• Commitment to always be cheaper than BT

They could have included on the list those ‘Human Animations’ adverts that bookend ITV Mystery Drama shows, and the fact that they share a name with a critically lauded proto-post rock pop group who shot to fame with the song ‘It’s My Life’, which was later covered by Gwen Stefani.

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After about a year of negotiations and will-they-wont-they speculation, Carphone Warehouse has finally snapped up Tiscali’s UK operations for a cool £263 million. This purchase means that Carphone has leapfrogged Virgin Media to become the second largest ISP in the UK, with some 4.25 million broadband subscribers.

More importantly, the buyout means that Tiscali customers, concerned that they may lose their connection can rest easy. It was thought that Tiscali had racked up debts of €500 million across the Continent, and rumours of the group going into administration had subscribers understandably worried.

Tiscali UK CEO Mary Turner said: “It’s good news for our customers who will increasingly benefit from a group that has consistently championed best value and award-winning customer service.”

Carphone Warehouse chief executive Charles Dunstone also said: “It has been the longest deal I have ever worked on. I think it has been hard for the shareholders of Tiscali because during the process we had the collapse of the banking world and then the decline in the pound to the euro so we think this price is low.”

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According to some ’secret plans’ leaked in yesterday’s Guardian, quad play provider Virgin Media are apparently intent on opening up their fibre optic cable network to rival providers. The article details how the fibre provider has “plans to open up its cable network to rival telephone and broadband companies” in around 18 months’ time, loosely following BT’s Openreach template.

This move would see the likes of Sky, O2 and the Carphone Warehouse offer fast cable broadband services where available alongside their more traditional copperwire ADSL services.

BT is already busy setting up a fibre network of its own, which is not due to be complete until 2012. If Virgin Media were to open up their network before then, BT could in theory get its customers signed up to cable on the Virgin network, and then migrate them across to their own lines once the network is up and running.

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Carphone Warehouse has decided to put an end to speculation regarding the break up with TalkTalk… by announcing that the group is breaking up.

Whilst the demerger won’t happen for some time yet, Carphone founder Charles Dunstone said that the current economic climate will “undoubtedly present challenges” which may see the broadband provider split from its parent company “in the year ahead”.

Under Carphone’s plan, the high street mobile retailer and broadband provider TalkTalk would be split into two separate companies.

“We are well funded, and have clear and simple strategies for our two businesses which balance growth with tight operational efficiency and cash generation,” said Mr Dunstone.

It is unsure whether AOL will merge with the TalkTalk, or remain part of the Carphone Warehouse group.