Carphone Warehouse declares war on BT

Publishes free call plans

The Carphone Warehouse - Europe's biggest mobile phone retailer - is to offer free calls to its residential customers in a move that looks set to spark a price war between telcos in the UK.

Although the offer was widely trailed at the weekend, the full details suggest that The Carphone Warehouse is gunning for BT.

From 1 April, all calls between The Carphone Warehouse's TalkTalk residential customers will be free of charge, regardless of time of day or length of call.

The rates for all other calls remain unchanged while The Carphone Warehouse insists that it will continue to offer discounts compared to BT.

The Carphone Warehouse reckons the lure of free calls with prompt groups of people such as families and friends to sign up to the offer.

Said The Carphone Warehouse chief exec, Charles Dunstone: "Free Calls is great news for our existing customers and will encourage new customers to join and recruit their friends and family so they too can talk for free. It isn’t just free local calls, it isn’t even just free national calls: we also plan to offer free international calls between TalkTalk customers in a number of our European markets.

"We expect this to translate into tangible benefits from the overall scale of the business, a reduction in churn and lower average customer acquisition costs."

A major marketing campaign is due to kick off next week as The Carphone Warehouse attempts to erode BT's 70 per cent share of the UK's fixed line market.

By the end of March The Carphone Warehouse reckons it will have some 380,000 punters on its TalkTalk service.

In a sign that things are hotting up, BT announced yesterday that it was scrapping in July its standard rate tariff for nine million phone punters in a move to simplify call charges.

The UK's dominant fixed-line telco reckons the decision to increase line rental by £1 a month while offering cheaper calls would make the monster telco less expensive for most UK calls than rival cablecos NTL and Telewest. It also said the move would make it more competitive compared to other telco providers such as One.Tel, The Carphone Warehouse and Tesco.

But the move was condemned by competitors who accused BT of anti-competitive behaviour. Communications watchdog Ofcom said it was looking into the matter and was considering a full investigation.

Earlier this week an influential group of MPs said that UK punters are paying over the odds for their phone services because tariffs are too confusing.

In a stinging report by the Public Accounts Committee, MPs said that more should be done to help consumers switch telco providers. BT was singled out with MPs reporting that its continued dominance of the UK market was "unacceptable". ®

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