Bulldog, the broadband internet company owned by Cable & Wireless, has pulled out of the consumer market, ducking out of a fight against bigger names such as Orange and Carphone Warehouse.
Cable & Wireless has, however, ruled out a sale of the unit because it intends to sell wholesale broadband services to other companies looking to offer internet services under their own brand. The company also expects to use Bulldog's network to service its corporate customer base. As a result, 150 sales and marketing jobs will be cut.
Bulldog has struggled with customer service issues and was chastised by the regulator Ofcom last year for not connecting customers that had signed up for broadband on time.
John Pluthero, C&W's UK chief executive, said the decision to pull out of the consumer broadband market should not affect the company's 140,000 retail customers, who will continue to be serviced. He added that new customers can continue to sign up through Bulldog's website but conceded that its customer base may yet be transferred to a wholesale customer at a later date.
Ostensibly, Bulldog has pulled out of a race many expected it to lose. With the retail heavyweights Carphone Warehouse and Orange already offering free broadband, and BSkyB and NTL gearing up to compete in the space, Bulldog looked likely to struggle.
"If I get into a fight, I like to know I can win it," Mr Pluthero said. He said Bulldog spends about £200 to sign each customer while companies with a strong retail presence will be able to sign up customers at a fraction of that cost. Despite actively marketing broadband over recent months, Bulldog's meagre progress pales in comparison with the 340,000 users who signed up for Carphone's offer over the past two months.
Instead C&W, which does not have a high-street presence, will provide broadband capacity to other companies looking to enter the market. Vodafone and O2, the mobile companies, are considering ways to enter the broadband market and Mr Pluthero said C&W was already in talks with other companies about a wholesale agreement.
Cable & Wireless bought Bulldog for £18.6m in 2004, boosting Bulldog's investment in local loop unbundling - a process where companies install equipment directly into BT's local exchanges to improve margins and offer differentiated services.
Mr Pluthero said that since 2004, it has spent about £110m on local loop unbundling and has booked a further £150m in operating losses. It expects the unit to generate an operating loss of between £100m and £110m in the current year with limited benefits from its wholesale plans envisaged this year.Reuse content