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The long and winding road back

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Analysis Beleaguered ISP PlusNet is attempting a comeback with a suite of new deals, backed by its new owner BT.

PlusNet's 200,000 subscribers were picked up by BT at the tail end of a year which saw its long standing good reputation dismantled at its own hand. Technical cock ups, followed up with terrible customer service resulted in the Sheffield-based outfit taking a pasting in these pages, and eventually the mainstream press.

Product development director Neil Armstrong told The Register: "As a PLC we squeezed too hard. Too many decisions were made which put shareholders before customers."

One such decision resulted in a catastophic email failure and customer data loss. Budget Sun servers were stretched beyond what they were designed to cope with. A cash injection from sugar daddy BT Retail has paid for a new NetApp setup. PlusNet is halfway through migrating to to the new system, so far without any hiccups.

It'll be a long road back, however. In 2005 PlusNet went from about 100,000 subscribers to about 195,000, growing faster than the pack who were riding the wave of broadband uptake. The catalogue of disasters last year meant subscriber numbers were static, but the churn rate increased. The £67m BT laid down for PlusNet surprised many, then, but unlike when Carphone Warehouse bought AOL, there were draws beyond the current customer base.

At a media briefing on Thursday, Neil Rogers, head of 21CN, BT's next generation network, said one of the main aims of the nationwide upgrade project was to automate more of broadband users' interaction with the firm, with more "click to order" services. When it bought PlusNet, BT pointed to the firm's experience in running banking-style online customer services. In the early days of dial up ISPs in the UK, the only way to get an email address was to fax an order to Demon, which operated the system back then, until PlusNet developed an automated web form.

The torrent of complaints invoked by 2006's failures taught PlusNet that automation cannot do everything, however, and it has since added more call centre staff. Unanswered calls bred more complaints, sending customer care into a downward spiral it took weeks to recover from.

The plan is for BT to run PlusNet hands-off, selling its broadband via BT Wholesale as it does any other IPStream ISP. It will get access to BT's extra bells and whistles, however, like Home Hub, Fusion mobile/WiFi phone, and later the IPTV offering BT Vision. PlusNet will continue as an independent business to the extent that the 10 per cent of PlusNet customers served by telephone lines which have been unbundled by Tiscali will stay off BT's network, Armstrong said.

Despite the sale of Pipex apparently falling through, the broadband market is set for more consolidation this year, with many tipping Tiscali to be put on the block. Without Pipex and Tiscali, PlusNet would be left the biggest "tier 2" provider, a category which has taken the biggest hit from the entry of Sky, Orange, and TalkTalk. The consensus is there will be room for only a few smaller operators, each needing its own unique pull to survive. Armstrong said: "There are people out there who don't want to deal with a company like BT. Our aim is to be the best tier 2 provider. Sensible people know 'free' is bollocks."

In a bid to win back customer trust, PlusNet's new packages all run on a one month rolling contract, rather than the 12 and 18 month lock in which TalkTalk uses to make its "free" offer make business sense. It reckons it can use the "unlimited" broadband controversy to its advantage by being up front about download limits and bandwidth throttling. Armstrong, a broadband industry veteran, says the anticipated popularity of P2P video application Joost will test many ISPs' current policies beyond their breaking point.

PlusNet built its formerly good reputation on word of mouth recommendations as the ISP for people who understand the internet. Its aiming to reclaim that title with new packages which are designed and customisable depending on how users want to use their connection. There's more details here.

Only time will tell whether it's learnt its lesson. And if not, you'll read it here. ®

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