Cable & Wireless has acquired broadband ISP Bulldog for £18.6 million, the company said on Friday.

The acquisition follows Bulldog's successful rollout of business-oriented symmetrical DSL services using its own equipment to directly compete with BT, under a programme called Local Loop Unbundling (LLU), which allows smaller telcos to gain direct access to BT's last-mile infrastructure.

"Local Loop Unbundling has been important as a way of offering full, end-to-end services to large enterprise customers," said Cable & Wireless spokesman Peter Eustace. "We will leverage our existing base of large enterprise customers to offer LLU-based services."

He said Cable & Wireless' target customers are small and medium-sized businesses and enterprise branch offices. "T1 lines may be required for enterprises' largest locations, but large business have smaller locations that can benefit from DSL," he said.

Bulldog was founded in 2000 and began offering services in 2002. It offers services using the business-oriented symmetric DSL (SDSL) technology via 38 BT exchanges in London, as well as reselling BT's SDSL in other locations. BT has SDSL-enabled exchanges in London, Birmingham, Manchester and parts of urban Scotland, and earlier this month said it would double SDSL coverage by enabling another 150 exchanges.

SDSL is aimed at businesses that host servers or large amounts of traffic onto the Net since it offers up to 2 Mbit/s both ways on a phone line, compared with ADSL's typical 256 Kbit/s or less. Unlike ADSL, upload speeds are as fast as download speeds.

BT is careful to keep its own SDSL services from competing directly with its leased-line business; for example, BT's SDSL has a better contention rate than ADSL - meaning service doesn't degrade as quickly as more users are added to an exchange - but T1 lines are uncontended. LLU has allowed Bulldog to operate without such scruples - it offers an "IP leased line" service with no contention.

Since its introduction in 2000, LLU has been a flop, according to industry observers, with only a few thousand lines unbundled and connection fees far higher than the European average. However, the new communications regulator, Ofcom, earlier this month set out to change the situation - and BT pre-empted the launch of Ofcom's new LLU measures by announcing it would cut LLU pricing by up to 70 percent over the next few months.

Ofcom welcomed BT's price cuts but said it would carry out a full competition review, and is to appoint an independent adjudicator to ease relations between BT and independent telcos. Industry analysts noted that BT's dramatic LLU price cuts only bring UK costs for shared access down to the EU average, while BT's LLU connection charge remains 50 percent above the average - meaning the situation could still improve for smaller operators, resulting in more competitive business services.