Carphone broadband offer to trigger cut-throat price war

Carphone Warehouse’s launch of a “free” broadband service will force rivals like BT to retaliate with cut price offers and spark a price war among internet providers, according to industry experts.

Despite being labelled a “marketing gimmick” by one City analyst, Carphone’s offer has been described as “unprecedented” by others who predict it will revolutionise the high-speed internet market.

Broadband typically costs between &£15 and &£20 a month at present but Carphone says its service will cut residential bills by up to 60%.

Customers using the company’s TalkTalk service will be able to make unlimited local and national calls from their home phone for &£20.99 a month. The package also includes a broadband connection and unlimited calls to 28 European countries.

BT Retail chief operating officer John Petter dismisses Carphone’s offer as “a clever marketing ploy from a clever marketing team”.

Chris Williams, home telephony product manager at comparison service uSwitch, says: “Carphone Warehouse has set a benchmark for the industry and other providers will have little choice but to follow suit to be able to compete effectively. This unprecedented deal is great news for consumers and makes broadband accessible to all.”

Carphone will make a loss on &£50m on the business this year, but hopes to make a &£40m profit by 2008. Customers who join the service will no longer have to pay BT’s line rental charge but will pay a one-off connection fee of &£29.99.

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