BT and Oftel baffled as unbundling fails to attract

Plans to dismantle BT's telecommunications monopoly are falling apart as competitors stay away

Oftel has been forced to call an extraordinary meeting between BT and other telcos Thursday as orders for unbundling fail to materialise.

Only one operator -- Eircom -- is currently offering unbundled services to customers despite the fact that up to 25 exchanges are now available to other operators. According to BT it has received "orders from only one or two operators" per exchange despite hopes that there would be up to ten operators per site.

Unbundling of the local loop is the cornerstone of the European Union's strategy to free telephone lines from the grip of incumbent telcos. It has been extremely keen to see services up and running this month. Oftel has come in for a great deal of criticism for being behind on the UK unbundling timetable, but has in recent months come down hard on BT to get its finger out and allow other operators into its exchanges.

Despite the fact that BT has opened exchanges in London, Edinburgh, Manchester and Leeds they have so far failed to attract operators -- only Belfast has broadband services rolling out, courtesy of Eircom.

Oftel, despite its enthusiasm for the unbundling process, claims it does not know why operators are failing to jump on the unbundling bandwagon. "We have done our bit," says a spokeswoman.

The best excuse the watchdog can come up with for the lack of takeup is what it describes as a "lead time" between the opening of exchanges and the offering of services. So what comfort can it offer to consumers desperate to take advantage of the cheaper broadband service promised by unbundling? "I can't say anything to consumers about what, when or how much," says the spokeswoman.

Instead, Oftel intends to get the operators together to discuss any problems. "The orders for space at the first wave of sites are lower than anticipated. If operators have concerns about the price or other issues with the process then we want to know," the spokeswoman says.

BT confesses itself "incredulous" about the lack of interest in unbundling. "There was all this clamour and now we are faced with undersubscription," says a BT spokesman.

Operators have been dropping out of the process in droves, citing the expense and slow rollout as reasons for ditching unbundling. Cable providers ntl and Telewest claim they intend to make do with broadband via cable and Energis says it is cutting back its ADSL investment because of the way BT has handled the process. Oftel admits there are talks going on behind the scenes but claims to be unaware of any outstanding differences between BT and rival operators.

For analyst with research firm GartnerGroup Adam Daum the lack of interest in unbundling is "astonishing". "It is a shambles," he says. "Operators have been whinging at BT for years and now they finally have unbundling they aren't using it. It is bad news for content providers and bad news for anyone dependent on consumer broadband," he says.

In fact the only winner is BT, Daum believes. "The BT share price should get a shot in the arm as it becomes apparent that BT really doesn't have any competition in this area," he says.

Local loop unbundling may have commenced with a whimper not a bang, but that isn't to say that it won't be revolutionary. Go to UK Anchordesk, and let Guy Kewney tell you why.

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