Why TalkTalk's troubles will get worse

Carphone Warehouse has announced results today, including a £70 million loss on its TalkTalk division, which retails BT's broadband while putting its own equipment in phone exchanges to offer "unbundled" services. The company is hoping that the long-term investment in local-loop unbundling (LLU) will eventually offset the loss from buying wholesale broadband form BT, and supporting customers who a.

Carphone thinks LLU will save it from the troubles its broadband offer have created. I don't agree.

Here's one news report:

In all, the group had penciled in a 160 mln stg investment in the broadband business, most of which will be spent on putting its own equipment into BT Group local exchanges.

So far, it has 'unbundled' 370 of these exchanges, and the group said it remains 'well on course' for having a presence in 1,000 exchanges by May next year.

Elsewhere, we hear Carphone Warehouse has "had to pay to use BT services while it waits for its own high-speed internet access into homes to be fitted" (This is Money). So LLU will save the day?

Not as far as I can see. My two weeks speaking to various people within TalkTalk leads me to the conclusion that TalkTalk simply does not have the back-end systems or organisation to manage LLU. The systems and bureaucracy within the company are separated from each other, and cannot talk to each other, which will lead to massive over-spend, since every fault will incur vastly more cost than necessary.

TalkTalk's internal systems are broken up and Balkanised at least as badly as BT's were in the old days of British Telecom. In the old days, British Telecom's telephone faults could sometimes go unfixed for days or weeks, while BT's departments passed the buck amongst themselves. One division would be convinced the fault was in the local loop, while another believed it was in the house. Neither would do anything, because they believe it was someone else's problem.

BT has learned from that problem. TalkTalk is repeating it.

To someone in TalkTalk's Faults department, An LLU problem looks like an unfixable "cease order" that can only be traced to BT. To the LLU department, it looks like one of theirs, but maybe it's to do with the account creation?

These problems are real and so far TalkTalk has "declined to comment" on the above.

I asked the PR agency for comment; instead my request got treated as a nag from someone "playing the journalist card" and al I got yet another illustration of TalkTalk's troubles.

As a journalist, my special treatment extends to someone from TalkTalk, called Sat, actually phoning me (imagine that!). He promised to sort it out.

Two days later, I phoned him back and guess what? Can you guess? "It's an LLU issue, sir." He has a colleague called Jonathan who can deal with that. Two more days, and I haven't heard from Jonathan.

Today is the date when LLU promised me the problem would be fixed -- that was a promise made on Friday by someone called Ken, that Kevin Parkin (or Perkin?) would have it resolved in "72 working hours".

As I say, the story is that TalkTalk's problems extend well beyond its difficulties in delivering IPstream DSL services from BT Wholesale. LLU seems to be beyond its ability.

BT has been slammed for failing to support LLU properly, which can't be making things easier at TalkTalk LLU, but TalkTalk LLU seems to have an impossible position within TalkTalk as a whole.

I believe that Carphone Warehouse is heading for an even bigger broadband loss and an even bigger remedial investment when its LLU troubles become public.

Oh, and if that's not enough, Carphone wants to buy AOL UK, too. That should be aumusing.