Cable and Wireless will stop selling broadband to end users, just a week after a second "free" broadband offering hit the UK market, the company said Thursday.
Instead of selling services to end users, Cable and Wireless will instead wholesale its network to competitive providers. It will reduce its workforce by 150 and continue to support existing customers.
The announcement comes a week after mobile phone operator Orange began offering free broadband to customers who subscribe to a monthly plan of £30 (US$56) or more.
On Tuesday, the first operator to offer a "free" broadband service in the UK, Carphone Warehouse, said it has been overwhelmed by the response. Since April, when Carphone Warehouse began offering broadband to subscribers of its £9.99-per-month telephone service, the operator has begun serving 100,000 of 340,000 people who have signed up to the plan.
Cable and Wireless says its announcement isn't directly related to the free offerings. "We kicked off this review before Carphone made its announcement," said John Pluthero, group managing director and UK chairman for Cable and Wireless, speaking during a conference call.
In late March, Cable and Wireless began a review of different strategies for its broadband network, including buying customers from another service provider or selling off the network. "It became clear that the wholesaling approach represented the best way to optimize the investment in the asset going forward," he said.
Cable and Wireless' exit from the retail market isn't necessarily bad news for end users, an analyst said. "You won't see competition disappear," said Gartner's Katja Ruud. While competition is driving prices down in the UK, the market is large enough that it will continue to attract new players.
Those players could come from new segments, such as the mobile market or other consumer markets. Several operators have approached Cable and Wireless about wholesaling its network, Pluthero said. "Not just from Internet service providers either. There are other players across different consumer markers who feel this is an interesting space for them," he said.
In addition to Orange's announcement about bundling broadband with mobile, Vodafone recently said it plans to start selling broadband to its customers.