C&W pumps up broadband spend

Cable & Wireless (C&W) is to capitalise on its investment in local loop unbundling (LLU) by providing unbundled services to its corporate customers.

So far, C&W has installed its kit in 411 BT exchanges via Bulldog, its consumer-oriented broadband ISP, and expects this number to double by the end of September. But the telco is now looking at how it can squeeze even more cash out of its LLU investment beyond Bulldog.

The firm regards its LLU network as a "strategic asset" for its entire UK business and plans to use its LLU infrastructure to provide corporate customers with telecoms services.

"Local loop unbundling is a fundamental part of our UK corporate access strategy, which we will leverage in the future as part of our move to next generation and IP networks," said C&W, announcing its annual results to the end of March.

"Using full LLU, rather than shared, allows us to maintain end-to-end bandwidth control and differentiate our services from those of our competitors. In 2005/06, we increased our broadband speeds from a maximum of 4Mbps to 8Mbps and, since the year-end, to a maximum of 16Mbps," it said.

Part of the reason C&W is looking to capitalise on LLU is down to an acceptance that competition in consumer broadband services "is tough and is likely to increase as the rapid take up of broadband slows" with ISPs increasingly competing with each other to poach punters rather than acquire new broadband customers.

This downward pressure on prices is likely to continue. Carphone has already unveiled details of its "free broadband forever" package, while Wanadoo is widely tipped to follow suit with a similar "free" offer when it rebrands to Orange next week.

According to C&W figures, Bulldog has some 112,000 residential broadband customers and 6,000 business LLU punters spending an average of £36 a month with the firm.

Over the year to March, Bulldog generated total revenues of £33m - up from £11m a year earlier. But while revenue is up, so too is Bulldog's spending. The ISP made a total operating loss of £120m compared to a deficit of £30m in 2004/05.

Group revenues at C&W rose last year to £3.26bn from £2.9bn. At the same time pre-tax profit fell from £326m to £209m. Earlier this year C&W restructured its business and announced plans to ditch thousands of customers and concentrate on big enterprises intead.

Since November 2005 the firm has reduced the number of customers from 30,000 to 21,000 as it aims to reduce that figure to 18,000 by the autumn. ®