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Author Topic: Orange deal with BT stirs up fight for broadband supremacy  (Read 5508 times)
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mobaholic
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« on: April 16, 2010, 02:44:48 PM »


Orange has opened up a new front in the fight for broadband customers after abandoning its fixed-line network and cutting a deal with BT to offer better high-speed internet.

The move is Tom Alexander’s first significant strategic decision as chief executive since Orange and T-Mobile merged last month to create a company with nearly 30 million mobile customers and an ambition to up its game in the burgeoning broadband market.

The company will now go head-to-head with the market leaders BT, Virgin Media and TalkTalk, and sharply increase competition.  That could drive charges down for the customer.  Orange has moved to cut its losses after spending hundreds of millions of pounds on its network over the past decade.  It will piggyback on BT’s national network and almost double the size of Orange’s broadband footprint, freeing up resources to invest in improving its product and customer service.

BT will take over Orange’s fixed-line infrastructure and integrate it into its network, which should vastly improve the experience for Orange’s 840,000 broadband customers and extend the mobile phone company’s coverage in fixed-line to the entire country.  Orange’s present broadband network reaches about 65 per cent of the population.  About 61 staff will be transferred to BT.

Orange’s poor performance in broadband is a far cry from the days of Freeserve, which was acquired by Wanadoo in 2000 and subsequently merged into Orange by its parent company France Télécom.  Freeserve was the largest internet provider in the country when the French company took it over.

Orange has improved its standing in the mobile market since Mr Alexander took over as chief executive in 2007, but it has continued to lose significant market share in the competitive broadband sector.  Its customer base fell below the one million mark last year for the first time in a decade.

Orange is the country’s fifth-largest broadband provider, but the only important ISP in decline.  It has had its broadband operations under review for ten months and considered abandoning the market altogether.

Bruno Duarte, Orange’s vice-president of strategy, told The Times that it had decided to take the drastic step of outsourcing its network to make providing broadband commercially viable.

“We are not satisfied with where we stand with broadband, as our customer base is declining and our performance is poor.  But we need to remain in fixed-line broadband so decided to fundamentally change what we are doing,” he said.

Mr Duarte argued that the company’s problems related to its ageing infrastructure.  Orange has invested hundreds of millions of pounds installing its own equipment in local exchanges over recent years, but Mr Duarte said it would have needed to spend much more to get its network up to scratch.

Orange’s mobile business has been propping up its broadband activities, which lost almost £80 million last year, despite generating nearly £200 million of revenue.

The deal with BT will put Orange in a similar position to Vodafone, which offers customers broadband services but rides on the back of the BT network.  O2 had its own network infrastructure after it acquired Be Broadband in 2006.

Mr Duarte said that divesting the network would allow Orange to step up its investment in improving its competitive position.  Despite launching expensive advertising campaigns for its mobile phone products over recent months, broadband marketing has been restricted to online and direct channels.

The decision to pass its network to BT mirrors a similarly dramatic move last year by Kingston Communications, the Hull-based fixed-line telecoms company now trading as KCOM.  It handed over its network to BT and signed a wholesale deal to get national coverage and reduce its costs substantially.

Source:-   http://business.timesonline.co.uk/tol/business/industry_sectors/telecoms/article7099128.ece

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delaro
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« Reply #1 on: April 16, 2010, 08:57:49 PM »

I've got mixed feelings with regards to this article.

Last year I ordered a new BT line with intention to move it to orange. Because I'm PAYM customer I'm currently paying 15 quids for line rental + broadband + second line facility. BT charged me almost £80 for canceling the contract early. So, is a new customer - who'd like to do the same after this agreement has come into force - going to be charged as well? I wouldn't be surprised if the answer was affirmative.

On the other hand I hope the quality of the line would improve.

dlR
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mobileman
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« Reply #2 on: April 17, 2010, 09:43:37 AM »

I've got mixed feelings with regards to this article.

Last year I ordered a new BT line with intention to move it to orange. Because I'm PAYM customer I'm currently paying 15 quids for line rental + broadband + second line facility. BT charged me almost £80 for canceling the contract early. So, is a new customer - who'd like to do the same after this agreement has come into force - going to be charged as well? I wouldn't be surprised if the answer was affirmative.

On the other hand I hope the quality of the line would improve.

dlR

I suggest that you take a look at the post by George Weston here delaro.   Wink

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delaro
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« Reply #3 on: April 17, 2010, 04:26:37 PM »

mm,
Aye! I appreciate that. I presume nothig's going to change in relation between customer / company. Like it was said in some of the post over there. Orange is just admitting it is more up to the job than theirs.

dlR
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