Broadband provider iomart is to abandon its consumer ADSL offering and sack 50 staff it announces on Tuesday.
It will be another blow to the ailing UK broadband market, which has already been put at the bottom of the high-speed Internet access league table by a series of surveys, including one from the OECD.
In a statement on Tuesday the ISP claimed it has been a victim of the general business malaise surrounding the Internet and that rollout of ADSL in the UK is "well behind the rest of the developed world".
"We need a slimmer, fitter organisation as we turn our focus to the business market," said iomart chief operating officer Angus MacSween.
Iomart -- a BT reseller of ADSL -- was one of the few companies to launch a marketing campaign for its broadband services and its advertisements were plastered all over tube stations and trains in the UK. Now it has withdrawn from the consumer market it will send out more warning signals to a government determined to see the UK as the best broadband nation by 2005 that there is a fatal problem with existing rollout.
The problems ISPs have encountered with rolling out broadband mirrors last summer's unmetered crisis, in which ISPs withdrew unlimited narrowband Internet access offers because they claimed it was not financially viable. The issues with broadband are different claims Jupiter analyst Dan Stevenson.
"This is a supply and demand problem. Currently there is not enough incentive for consumers to get broadband," he said. "It is a catch 22, few services designed for broadband because there is not sufficient subscriber base. Another factor is price but generally it is down to lack of awareness."
A survey conducted by cable operator ntl found that nearly three quarters of Britons had never heard of the term broadband and 30 percent of those that had thought it referred to radio.
While BT has connected around 50,000 users in the UK, its equivalent in Germany has 500,000 subscribers. ISPs and operators have complained bitterly about both the local loop unbundling process -- which would allow rivals to provide their own broadband services -- and the wholesale offering the telco currently provides to ISPs. Oftel is currently investigating claims that BT is unfairly using its market position to dominate broadband services but no decision has yet been made.
Last month BT announced it was moving out of consumer ADSL to concentrate on providing service to the business community. Later in the month Freeserve announced that it was putting up the price of its consumer broadband service from £39.99 to £49.99 per month, a move that analysts predict other companies will follow.
At the time Freeserve launched a bitter attack on both BT and Oftel, claiming that the price rise was forced on it because "we have no confidence in BT, or the regulator, in driving down the wholesale price to a level which will facilitate large-scale take-up of broadband in the UK". It claimed it BT was making it impossible for ISPs to create demand for services.
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