Post Office broadband pledge

The Post Office is entering the fiercely competitive broadband market and promising to poach customers from Carphone Warehouse and Tiscali.

The company, part of the state-owned Royal Mail group, is aiming to have 1m broadband and fixed-line telephone customers by 2010-11.

The Post Office will rely on its 14,500 branches across the UK to offer a sales network for broadband that other companies cannot match. It is also hoping its brand will fuel sales.

The company’s high-speed internet deals will be slightly more expensive than leading low-cost broadband providers. But it said a wholesale deal with BT, Britain’s leading telecommunications company, will ensure it offers a better consumer experience than rivals.

“We think we will take customers off Talk Talk and Tiscali,” said Martin Moran, head of telecoms at the Post Office.

Many of Carphone Warehouse’s broadband customers, who rushed to sign up to its “free” Talk Talk broadband offer last year, are coming to the end of their 18-month contracts, and some encountered serious difficulties with the service.

The Post Office’s combined broadband and phone package, offering download speeds of up to eight megabits a second, will cost about £22 a month on a 12-month contract. That compares with about £18 a month with Talk Talk or Tiscali.

The Post Office already has 400,000 customers for its fixed-line HomePhone service, which was launched in 2005. It generated £91m of telecoms revenue in the year to March 31 – almost 10 per cent of the Post Office’s turnover.

With the move into broadband starting on Monday, the company is hoping its telecoms services will contribute about 25 per cent of its revenue by 2010-11. It is also considering whether to become a mobile phone operator.

The pledge to provide a superior consumer experience is rooted in the way it will offer broadband and phone services. The Post Office signed a £750m wholesale deal with BT in May.

So although they are unlikely to realise it, the Post Office’s broadband customers will get their services over BT’s fixed-line network. BT will also deal with any service issues.

If the Post Office launched a mobile service it would be a “virtual” operator, using another wireless company’s cellular network, Mr Moran said.

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