Carphone’s two-play flair puts BT on spot

Once again, Carphone Warehouse chief Chris Dunstone has left his rivals floundering with a display of entrepreneurial flair rare in the stodgily “corporate” telecoms sector.

All right, the offer – essentially free broadband and a package that promises to cut residential phone bills by 60% – may not be all it’s stacked up to be on closer examination of the small print. But then, name me a telecoms offer that is? Throw in the fact that there is free line rental for a &£20.99 monthly tariff, and this looks like a fairly compelling propaganda coup – Dunstone’s “Freeserve moment”, as some would have it.

One or two analysts have carped about the relative feebleness of Dunstone’s “two-play” strategy of telephone and broadband compared with the exciting possibilities of “four-play” – the hoped-for progeny of a marriage between glamorous Sir Richard Branson and dowdy NTL. But NTL has much to prove before it becomes a formidable competitor. It must digest Telewest, assimilate the Branson culture and, not least, demonstrate that there really is business and consumer symbiosis between mobile platforms and the proven trinity of TV, telephone and internet. In comparison, what Dunstone is offering is simple to understand and pretty much here and now.

“Pretty much”, because Dunstone’s one Achilles’ heel seems to be that he will not, for technical reasons, be able to make the new service widely available until well into next year. This need not trouble him unduly where other new entrants, such as BSkyB and Wandadoo, are concerned, since they face precisely the same distribution constraints. But it might be thought that BT, the one company that does not have to worry itself about the complexities of unbundling the local loop, was in an excellent position to initiate a vicious, pre-emptive price war.

In fact, BT has contented itself with a few derisive comments about the “gimmicky” nature of Carphone’s initiative and a bland assurance that it already offers excellent value for money (once you examine the small print). Is this stunning complacency, or is BT merely keeping its powder dry?

Of course, once the entertaining theatre of the broadband land-grab is over, there remains the not-unconnected issue of what people are going to do with all this extended bandwidth. Aside from the BBC (which only has serious accountability issues once every ten years, but for that reason performs the useful role of a formidably resourced digital laboratory), this is a source of increasing anxiety to content providers and brand owners alike. When will the tipping point from linear TV to on-demand TV be reached? And what will be the appropriate commercial model to succeed the 30-second spot? Walt Disney, for one, has been engaging in some interesting twin-track experiments, testing online some of its most popular TV series – such as Lost, Desperate Housewives and Commander in Chief – both as a subscription service and, latterly, free of charge with ads that can’t be wiped.

The truth is the broadband tipping point is some way off, but experimenting with alternative distribution and commercial models right now is only prudence.

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