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TalkTalk slips under the 4 million broadband customer mark
Thursday 12 May 2016 11:20:28 by Andrew Ferguson

TalkTalk has shrunk again in terms of the number of broadband customers a trend that started in July 2015 ahead of the hack that many are citing as the reason for the drop in numbers, no doubt it has not helped with now just 3.996 million broadband customers. The latest financial figures for the group indicate that in addition to the hack an item we've reported on before i.e. a change in credit terms and letting 72,000 customers go for not paying their bills has also had an impact. The positive side is that the ARPU has increased.

Things are more positive on the VDSL2 and FTTH side of things the reported customer base on GEA-FTTC is 704,000 or 19% of the customer base compared to 13% a year ago. Also the FTTH pilot in York gets a large mention.

"We are making significant progress meeting the key operating metrics (cost per home passed, customer experience and penetration) in Ultra Fibre Optic (UFO), our fibre to the premise (FTTP) trial in York. We completed the build of the first 8,000 homes at a cost of under £500 per home and are now testing penetration. Customer trials ended at the end of March, when we launched the proposition commercially. Over 90% of the trial participants have chosen to retain the service and pay £21.70 per month which is particularly notable, as the vast majority were not existing TalkTalk customers. After two months TalkTalk UFO penetration stands at 7% of homes passed and continues to accelerate. Feedback from the first customers has been extremely positive and we are polling customers in other York neigbourhoods (their spelling mistake) to establish interest for the next phase of building.

Based on these experiences, we remain confident about the potential to roll out FTTP at scale. At a build cost of under £500 per premise passed and 30%-40% take-up, we believe it will be possible to build a c10million household network across the UK. We see Ultra Fibre Optic as an opportunity to build a mass market, value for money proposition that delivers value for consumers and shareholders through keen pricing and rapid scaling. We expect to review progress and decide on the next phase of development later in the year.

TalkTalk on York FTTH roll-out

7% take-up suggests 560 customers which is very similar to the figure CityFibre have suggested but does raise an interesting question, we have been seeing TalkTalk customers with speedtests that are clearly from the ultrafast FTTH solution for somemonths but for Sky customers that area of York looks to be still on FTTC type speeds, it is possible that Sky is running its pilot differently and matching the product speeds it sells across the rest of the UK.

The nation awaits the outcome and would love to see Sky and TalkTalk working with CityFibre to push the roll-out to 10 million premises but it has taken a year to get to the stage we are at now where work is pushing the coverage to 20,000 premises and thus any serious attempt to deliver 10 million premises is going to need massive expansion of resources and with both Virgin Media and BT still building faster networks the cost of contract labour is not about to drop significantly in fact if demand is high and being competed the cost may actually go up.

Comments

Posted by gsmlnx 7 months ago
York costs
8000 (homes) x £500 = £4,000,000

7% take up = 560 homes

£21.70 per month per home = £145,824 per year

Pay back (ignoring all running costs) 27 years 5 months

Value for money?
Posted by zyborg47 7 months ago
I heard Dido on the radio this morning, she said that people save money with Talk Talk, maybe against Bt, but not with other providers.
I pay £31 a month with plusnet, for the same service with Talk Talk I would pay £35. i am ignoring the offers for so many months, this is the on going price.
Posted by chilting 7 months ago
It would be good to see some new players in the market to take advantage of City Fibre's network.
Maybe a big utility company or two.
But they will need to see a better take up than 7% to get involved.
Posted by TheEulerID 7 months ago
That £21.70 per customer includes 20% VAT. Net it's £18 per line. Those 560 homes yield £121k net per year. That's before financing costs, operational costs, rates etc.

Let's say (generously) they are paying 3%, that's £120k per year. Payback is now 400 years (without operational costs).

So take up and/or price is going to have to be a lot higher to justify the investment.
Posted by herdwick 7 months ago
Didn't they say 30-40% takeup above ?

Still puts the cost at over a grand per connected customer.
Posted by herdwick 7 months ago
Talk Talk may be losing a few more ex virgin ADSL customers as they're cutting off the @virgin.net email addresses they will have had for 10 years or more.
Posted by TheEulerID 7 months ago
@herdwick

They say based on a 30-40% takeup, not on what they've actually achieved so far (I don't think anybody is suggesting 7% is the final level). Of course one way that TalkTalk and Sky can achieve more is simply by moving their customers to the new network. Quite where that puts the competition position in those areas, who knows.
Posted by gsmlnx 7 months ago
Okay, so they say that 30 - 40% take up is the minimum required.

Well that is going to be a hard sell and may take a decade to reach.

Why do I say that? Well I'm in an FTTP area and after 5 years, the take up is under 20% and that is when people here can only get 2Mbps ADSL. I doubt the TT York trial area has speeds that slow for BT based lines.
Posted by andrew (Favicon staff member) 7 months ago
The TalkTalk UFO covers some areas with just ADSL, but also mixes it up with Openreach FTTC, FTTP and Virgin Media cable.

Posted by gsmlnx 7 months ago
@andrew

That just makes it harder unless TT UFO can come up with some unique selling point.

Historically TT have used pricing to get customers but with recent security issues and much discussed customer service issues, how do they hope to get 40% when the high speeds are available from multiple sources?

How deep are their pockets? Not deep enough to make this more than a trial I would wage.
Posted by TheEulerID 7 months ago
@gsmlnx

TT and Sky both have the option of migrating their customers in the area to their FTTP service when it's available to a premises. That would drive the penetration level up, but I image the ISPs would have to cover the costs of new equipment and the final drop connection.

I think I'll have to get the spreadsheet working on this and refresh my knowledge of DCF and the like to see what the figures look like.
Posted by gsmlnx 7 months ago
@TheEulerID

Yes you can increase premises by migrating customers but you'd want to see the customer paying more to recoup costs, and that is the bit I feel TT are too optimistic about.

We'll see in another year how things are going and whether TT can afford to push ahead.
Posted by chilting 7 months ago
Maybe it is the marketing that is at fault for the low uptake. The TT brand is rather tarnished. It would be better if they set up a new division within the company with a different name that promoted the fact that they are offering an ultrafast product.
Posted by Gadget 7 months ago
You could migrate your customers, but there would be problems if that incurred increased monthly costs for them, so whilst you can artificially load the network unless you charge the same for the higher speeds as you do for your current DSL it will not give you any idea of what actual takeup is likely to be
Posted by baby_frogmella 7 months ago
@chilting
Nothing wrong with the TT brand, they've got ~ 4 million customers (exc. resellers) so they must be doing something right. Personally I get great speeds (75/19) day & night, top class warrington based phone support and have yet to be spammed by a Indian call centre :)
Posted by zyborg47 7 months ago
@baby_frogmella, nothing right with it either, it is tarnished and I still hear disaster stories about them. Plusnet has their problems, being part of BT for a start, but at least their call centre is in the UK. I still know people with Talk Talk who will not change and yet complain like hell about them, I don't understand some people, if they was cheap it would be a different thing, but they are not. Maybe they are on ADSL.
Posted by baby_frogmella 7 months ago
@zyborg47
Like I said TT have around 4 million customers so they must be doing something right. Punters WILL leave an isp in droves if their network goes pants - I take it you remember the debacle of Orange LLU a good few years ago?
Posted by chilting 7 months ago
The thing is that ultrafast should be treated as a new product and branded accordingly. To lump it in with other TT or Sky products is underselling.
Posted by zyborg47 7 months ago
@baby_frogmella, Sky have over 11 million customers and yet they are still pants, which proves people will still use a company even if they are naff.
Posted by baby_frogmella 7 months ago
@zyborg47 Nothing wrong with Sky, those 11 million customers are not forced to take out a Sky subscription and are with Sky by choice. Personally I cancelled my Sky sub donkeys years ago and am paying just a fraction with a MAG254 IPTV sub :)
Posted by zyborg47 7 months ago
@baby_frogmella, I never said customers was forced to use Sky, it just proves that people will use a naff company. I used now TV, but at least I can cancel when I want and I do not have to put up with awful customer service, not as bad as Talk Talk or BT mind you.
Posted by AlanSpringett 7 months ago
TT seem to have had major email connection problems since March 31. Many Pipex and other brand users have been unable to connect to the incoming mail server depending on the WAN IP address allocated. Getting TT even to investigate the issue has proved very difficult.
I suspect more "churn" to come.
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