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Sarah UKFast | Account Manager

UK broadband

Nowhere is the patch of territory where telephones meet the internet more fiercely fought over than in the UK broadband market. The past year has seen the most intense battle between an incumbent, in the form of BT, and pretenders, from British Sky Broadcasting to Virgin Media (formerly NTL) and Carphone Warehouse.

Charles Dunstone, Carphone's chief executive, has painted himself and his company as champions of low-cost broadband (a strategy that almost backfired when its "free" Talk Talk broadband offer was swamped with applicants for its service) taking on BT's premium service.

To make money, Talk Talk has to "unbundle" broadband customers from BT exchanges - a process in which not only users but revenue migrates from BT to Carphone. In the second quarter to the end of September, the effect of the accelerated pace of unbundling was felt in BT's wholesale division, where external revenue fell by 9 per cent compared with the same period of 2006.

But BT continues to earn residual charges on the unbundled lines and it has long predicted the trend to lower revenues in this area. Meanwhile, its retail division is expanding in broadband: BT took 37 per cent of the UK's net new broadband users in the second quarter - a higher share than expected.

Both companies also claim to be making a better profit from their growing customer base. Judging from Carphone's results yesterday, while there is a lot of propaganda spouted in this war, it may be one of those rare conflicts where both antagonists come away with trophies.

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