The Internet Service Provider is dead. Long live the Internet!

Bulldog's withdrawal from retail broadband signals a major shift in the communications market

So, it's goodbye and good riddance to Bulldog. Its time as a retail broadband provider was punctuated by irate complaints from customers who couldn't get the service they were paying for, and often couldn't even contact the company to get help. It's a mystery how the company avoided an ASBO.

Cable & Wireless is hoping to enjoy more luck by focusing on local-loop unbundling, and selling services to other Internet service providers. But this ignores a deeper truth. Pure-play ISPs are on the way out.

Cable & Wireless pulled the plug on Bulldog's retail operations when it realised quite how much success Carphone Warehouse was enjoying. It must have been sickening to spend years scraping together a meagre 118,000 or so broadband customers and then seeing a flogger of mobile phones scoop a third of a million sign-ups in six weeks.

But Carphone Warehouse isn't just offering broadband, it's offering 'free' broadband. Of course, it's not actually free — it's just part of a £20.99 a month TalkTalk package. But when other telecoms operators are charging upwards of twenty quid a month for line rental and calls, it's quite a bargain.

Carphone Warehouse could still come unstuck. For the economics to work it's got to unbundle BT's exchanges, and BT will do everything it can within the rules to slow the Carphone Warehouse bandwagon down. Its shareholders will demand nothing less.

But if Carphone Warehouse succeeds, then it will have firmly established that there's absolutely no future in simply providing a high-speed Internet service. Broadband is just like the road network - available to everyone, and interesting only as a means to an end. That means IPTV, triple-play services, perhaps home security - basically, whatever an innovative supplier can provide. And all, of course, over IP. Margins will be tight as telcos battle to win market share — and that's bad news for anyone hoping to profit from just offering Internet connectivity, on either a wholesale or a retail level.

It's a great example of the pace of change that broadband, which was overpriced and unavailable to tens of millions of us just a few years ago, is now being tarted around as a loss-leading service to lure punters in. It's certainly ironic that ISPs, who played their part in promoting the Internet, will be the big victims of its success. But that's what happens when yesterday's Big Thing becomes tightly sewn into the fabric of everyday life.

So can Cable & Wireless succeed as a wholesale broadband provider? Perhaps. It will need scale, and it will need to deliver a consistently good service — something at which Bulldog failed, utterly. Bulldog legacy is that poor performance will be punished by the market, but it should also be seen as a canary, whose demise is a warning of further casualties ahead.