Bulldog, Cable & Wireless's unbundled broadband provider, is said to be poised to pull out of the residential broadband market.
According to sources within the company, C&W will announce early Thursday morning that with immediate effect Bulldog will focus purely on the wholesale market. The rapid success enjoyed by Carphone Warehouse, with its hugely popular 'free' broadband offer, is understood to have forced C&W into the decision, with sources pointing out that Carphone Warehouse signed up a third of a million customers in three months, more than double Bulldog's total of 118,000 after two years.
A spokeswoman for C&W declined to comment for this story, but the company admitted last month that Bulldog faced growing pressure in the residential broadband market.
"Competition in consumer broadband is tough and is likely to increase as the rapid take-up of broadband slows," said C&W on 25 May, when it released its full-year financial results. "Providers will increasingly compete with each other to win existing ... customers (and) pricing pressure is likely to remain a feature of the market," it added.
In the 12 months to March 2006, Bulldog made a loss of over £100m on a turnover of £33m, which sources say C&W is most unwilling to continue to finance.
Bulldog was one of the first companies to use local-loop unbundling to install its equipment in BT's local exchanges and offer its own services. However, it has suffered serious customer service problems, with some users forced to wait weeks to get their broadband or phone service. This led to an Ofcom investigation last year.It's not clear what will happen to Bulldog's existing customers. Withdrawing from the residential broadband market will also represent a major u-turn for Bulldog, which recently began an expensive advertising campaign.