Broadband News

Are Cable and Wireless to pull out of the retail broadband sector?

The Sunday papers always carry a fair bit of analysis of the ups and downs of companies, it seems this week C&W has had its fair share of column inches. There has been items in the Sunday Times, Mail On Sunday, and the Sunday Telegraph.

C&W purchased Bulldog for £18 million originally, and has invested around £250 million in the company. To date this investment has brought in around 80,000 customers, or you could say each customer has cost £3125, which means a very long payback period. It seems some of the worries are that the UK broadband market may hit saturation point soon, and leave suppliers simply fighting over the same users all the time. Generally when that happens prices end up driven down, making it ever harder to regain the sort of money that large LLU investment will take.

Of course Bulldog ceasing to sell retail services is speculation at this time. The ISP could be sold off as an entity in its own right, or existing customers handed over to a new retailer, with Bulldog concentrating on the backroom network stuff. After the close encounter with Ofcom in the summer of 2005, becoming a wholesaler may have some appeal for Bulldog management.

After a positive report on the growth of LLU in January 2006, it would seem surprising if Bulldog were to give up now - that is unless Bulldog sales have not grown at the same rate as the LLU market overall. With players like AOL, and Wanadoo/Orange entering the LLU fray now - there is scope for companies taking a longer term view.


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