Update: Bulldog ditches home broadband market

Cable & Wireless has abandoned its goal of making Bulldog a major force in the retail broadband space.

Bulldog will not sign up any new broadband customers - instead, it will concentrate on selling wholesale broadband services to other ISPs.

In a statement released on Thursday morning, C&W said it would "cease any further proactive sales, marketing or advertising activities to acquire new residential and small business customers". Around 150 jobs will be lost, mainly from sales and marketing.

Bulldog added that its existing broadband customers will be retained, with "ongoing customer care and launch of new innovative services". However, the company has suffered repeated problems with its customer service and support over the last year, which led to an Ofcom investigation.

C&W said it still hopes to reach its target of 800 unbundled telephone exchanges by September 2006, compared to 411 today. This would allow it to offer wholesale broadband services in many urban areas in the UK.

C&W bought Bulldog in May 2004 for £18.6m. Since then, it has launched an expensive network rollout programme and invested heavily in advertising. In the 12 months to March 2006, Bulldog made a loss of more than £100m on revenue of £33m.

Last year, C&W said it was aiming to capture 30 per cent of the UK broadband market. According to sources familiar with the situation, the news that Carphone Warehouse had signed up around a third of a million customers for its 'free' broadband service since April was the last straw.

Analysts said they are not surprised by C&W's decision, following the problems suffered by Bulldog.

Cesar Bachelet, senior analyst at Ovum, said: "Rather than trying to compete head-on, it makes more sense for Bulldog to leverage its investment in unbundling by becoming a potential supplier to its current rivals. Currently operating as a retail ISP, Bulldog now has, on average, less than 300 customers per unbundled exchange, and prospects for growing this significantly are fading by the day."

Bachelet added: "However, if Bulldog is to successfully capitalise on the UK local loop unbundling (LLU) boom, which has been fuelled by substantial reductions in LLU charges and the creation of BT Openreach, the challenge, as ever, will lie in execution. Ditching a tarnished brand may be a good way to start."

Graeme Wearden writes for ZDNet UK