Carphone Warehouse rapped over 'two-tier pricing'

Owner of AOL's UK broadband business has been sharply criticised for charging customers more if they are not connected to an unbundled exchange

Price-comparison website uSwitch.com has criticised Carphone Warehouse for charging some of its customers £10 per month more for their broadband if they are not connected to an unbundled exchange.

The charge applies to those customers whom Carphone Warehouse bought from AOL last year and who are not connected to an unbundled exchange, which is one in which Carphone Warehouse has not installed its own broadband equipment. About 40 percent of the customers which Carphone Warehouse acquired from AOL are currently not connected to an unbundled exchange.

Charlotte Munes, a spokesperson for uSwitch.com, told ZDNet.co.uk that the policy mainly affected customers in rural areas, and claimed that there was no guarantee that exchanges in those areas would ever be unbundled. "If these companies are allowed to get away with this kind of two-tier pricing, other providers will follow," Munes added. "It is not fair that [customers] are being penalised if a company has decided not to invest in their area — there is a huge divide that emerges."

Carphone Warehouse responded with a statement pointing out that uSwitch.com's own figures showed a 17 percent drop in broadband prices over the last year. "AOL can offer lower prices to customers in LLU [local loop unbundling] areas, as we provide the whole phone line in these areas and don't have to rely upon BT providing this. We are confident that the customers in non-LLU areas are still getting a great-value-for-money broadband deal," the company said.

Ofcom said it would not act against Carphone Warehouse. A spokesperson said: "LLU is just one way of delivering broadband, so it is certainly not like people in rural communities don't have access to broadband because they don't have LLU. LLU requires significant investment on the part of the providers — you can understand why they are rolling out LLU in the first instance in higher density areas, from a commercial point of view."

The spokesperson continued: "From the regulatory point of view, there is currently no universal service obligation [USO] on providers when it comes to broadband… unlike in fixed-landline calls, for example," adding that it would be for the Department of Trade and Industry to decide whether to extend the USO to broadband.