Broadband competition boost as Energis lands Wanadoo

The deal is significant because it means that one of the UK's major Internet service providers is putting its faith in a service based on Datastream -- a telecoms product that is meant to help alternative telcos such as Energis to compete with BT.

Eamonn O'Hare, Energis' chief financial officer, announced the deal as part of the company's latest financial results. He told ZDNet UK that Energis was aiming to be the main broadband provider for ISPs that don't want to buy their bandwidth from BT because they compete with BT's retail arm.

"We hope to be the sole provider for Wanadoo going forward," O'Hare said.

Wanadoo has confirmed that is has plumped for Energis's Datastream product, called ISPConnect. "We will be looking to implement this solution towards the end of this year," said a Wanadoo spokeswoman.

But the ISP is downplaying the idea that it has completely abandoned BT's own broadband product range, called IPStream. It won't just be relying on Energis in the future.

"The decision to partner with Energis for this new solution was taken in order to ensure competitive supply. We have a number of options in terms of the broadband products that are available to us, and Energis is just one of those options," the Wanadoo spokeswoman added.

This is the first significant move in the Datastream arena since Ofcom forced BT to cut Datastream and local-loop unbundling prices, and O'Hare was keen to link today's news to Ofcom's recent actions.

"We have effectively been locked out of this market because of the penal regime that BT has got away with until recently," he said.

O'Hare estimates that ISPs other than BT Retail will gain one million new broadband customers during the next year, which would generate about £10m per month for whichever telcos provide their service.

"These ISPs are incentivised not to choose BT because they also compete with BT on a retail level," said O'Hare.

Datastream allows operators that have their own backbone telecoms network to connect to a BT local exchange and offer services down the copper lines linking individual homes and businesses with the exchange.

This gives more flexibility than IPStream, where an ISP uses the BT backend network as well as the copper line.

BT wasn't able to say if it would still be supplying Wanadoo with IPStream products for its future broadband customers, but did say that a migration path is in place to move customers from IPStream to Datastream if required.

Energis's financial results showed that it made its first ever profit in the 12 months to 31 March 2004. It made a profit before pre-exceptional items of £10m on revenues of £745m, compared to a loss of £369m the previous year.