Talk Talk (telecommunications Company) - Controversies - "Free" Broadband

"Free" Broadband

In 2006 TalkTalk launched a promotion offering free broadband. The promotion attracted criticism when demand outstripped supply and the network systems were unable to cope with the consumer response.

On 11 April 2006, TalkTalk started offering a free broadband service (up to 8 Mbit/s with a 40 GB monthly usage limit) for life to all subscribers to their Talk3 International telephone tariff at £20.99/month. Conditions included signing up to a minimum 18 month contract and a £29.99 connection fee.

The Advertising Standards Authority (ASA) challenged TalkTalk on their free broadband offer. Soon after this challenge, TalkTalk began to offer free broadband on their cheaper Talk3 tariff. This allowed people to have unlimited telephone calls, broadband and line rental for £19.99 a month. This offer was available to new and existing customers, though broadband was only free for customers connected to a Local loop unbundling (LLU) exchange. As of July 2006, TalkTalk claimed that free broadband was available to 70% of the UK population. They hope that this figure will increase as BT allow the unbundling of their remaining exchanges. Customers not on an unbundled exchange are charged a monthly fee for broadband access. Many users of TalkTalk Broadband do not experience the full 8 Mbit/s speed, as this depends on the extent to which the user's local exchange has been unbundled, and (as with all ADSL services) the distance from the exchange. Users not on unbundled exchanges get a fixed speed service at 0.5, 1 or 2M and not "up to 8M".

Some experts predicted this might provoke a UK broadband price war. Shortly following this report, Orange began to offer free broadband to users of their monthly mobile phone contracts, and Sky also began offering a variety of free or very cheap broadband packages to their subscribers.

Due to the unexpectedly high number of customers who signed up to the free broadband service, the launch suffered complaints with regard to a long waiting list to join the broadband programme and many difficulties in contacting TalkTalk customer services. In a Sunday Times interview, Charles Dunstone admitted that Carphone's TalkTalk business was "struggling to cope" with the more than 400,000 customers who signed up for high-speed internet access since the service launched in April. He also compared TalkTalk Broadband to "a little baby who’s waking up every two hours and is disturbing the family and making our lives a nightmare."

TalkTalk allowed customers to escape the binding 18-month contract for broadband "if it had failed to keep its service commitments in their case".

On the BBC programme Watchdog (3 October 2006), Charles Dunstone stated "I got it wrong. I didn't realise that free broadband was going to have the effect on people it has." To the Mail on Sunday, Dunstone stated "In about 20% of customers there is some kind of problem with the phone exchange, the line, or something else. There is no point trying to pretend everything is all right. Our business exploded and we compressed the problems everyone in the industry has had into a few months. It has given customers nightmares and I just can't ignore complaints." A customer satisfaction poll by uSwitch in November 2006 placed TalkTalk and Orange joint bottom for customer satisfaction.

The published figures show that by the third quarter of 2006, 540,000 users had been subscribed to TalkTalk broadband of which 132,000 were (TalkTalk) LLU lines. In the third quarter trading update, the published figure was 413,000 customers unbundled, including 281,000 AOL Broadband customers.

Roger Taylor (CFO) reported that the number of TalkTalk Broadband customers was lower than expected, but was forecasting 700,000 customers on unbundled lines (LLU) by March 2007.

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