Ofcom, the telecoms and media regulator, has announced an investigation into Bulldog, the internet service provider owned by Cable & Wireless (C&W).
Bulldog has been beset by well-known customer service problems, and Ofcom issued a statement yesterday saying it had opened an inquiry into the way Bulldog bills its customers and its complaints-handling procedures.
Bulldog customers have been sent bills for services they have not received and, over the summer, the company was swamped by thousands of complaints from customers left waiting for internet services that Bulldog failed to deliver.
A C&W spokesman said: "There was a two-week crisis when we couldn't cope with the call volume. We didn't know what the problem was."
Although C&W tried to put a positive spin on the investigation yesterday, claiming it would help the company "iron out" its problems, the inquiry is a serious blow to Bulldog's already battered reputation.
C&W shares fell 1.3 per cent on fears it may be forced into expensive remedial action by Ofcom to fix customer service issues.
C&W paid £18m for Bulldog in May last year. At its annual results in May this year, the company said it had spent £71m on capital expenditure and start-up costs for Bulldog in 2004-05. For 2005-06, it plans to spend £70m on capital expenditure for the business and is budgeting for a £90m operating loss which is expected to be a £45m loss in 2006-07.
C&W blames the recent collapse of its customer service systems on the success of its new 8 megabyte high-speed internet access product, one of the fastest internet connections available on the market.
The company is installing its own equipment in the local telephone exchanges of BT Group to provide connections to customers. A C&W spokeswoman said the company's problems had been compounded by a chaotic ordering system introduced by BT to keep track of orders that require BT engineers to co-ordinate with Bulldog.
"The problems have been caused by our rapid growth and how effectively we have been served by our supplier," she said. "They are new business problems which have now been resolved."
She added that the number of staff at Bulldog's customer service centre had been increased to 250, and would rise to 300.Reuse content