US companies abandon UK broadband schemes

Major US telecommunications companies Global Crossing and WorldCom have ditched plans to introduce high-speed Internet services in Britain, it emerged Wednesday, as criticism mounted over Oftel's handling of the local loop unbundling process.

The two telcos were expected to take a lead in supplying the UK with broadband Internet services in direct competition with British Telecom (quote: BT). WorldCom even chaired the industry working group negotiations on how competitors should gain access to BT's local phone network infrastructure.

This month UK telecommunications regulator Oftel stepped in to mediate after these negotiations proved ineffective.

It came as a surprise, then, that the companies do not appear on the list of 35 companies asking for access to the local telephone system, called the local loop. The list was published Wednesday.

Telcos have blasted Oftel's handling of the unbundling process. On Monday telecoms firm RSL Communications pulled out of bidding to connect UK local phone lines accusing the regulator of failing ensure fair play for rivals to BT.

RSL said BT had a free ride to market new high-speed broadband Internet technology in the prime residential and business markets, because other service providers could only apply for space at the least populated exchanges. "Oftel had the chance to create real competition to BT in the local exchanges, but it wasted the opportunity," said a statement from RSL, which provides voice and data services to small and medium-sized businesses.

It said the bidding process meant only 360 of the least popular exchanges would be available to newcomers and BT, the former state telecoms monopoly, would not have to bid to receive capacity for its own retail offerings.

"It gives BT time to tighten its grip in the prime markets while the competitors are left to struggle for market share in the least popular exchanges," said Nasdaq-listed RSL, which announced last month it was moving its headquarters to London from New York to focus on expansion in Europe.

BT currently controls the "local loop", the last mile or so of copper wires connecting homes to the telecoms network. Oftel has targeted this for full competition by July next year, allowing other operators to install digital subscriber line (DSL) equipment at local exchanges.

But Oftel said while it had drawn up the timetable, it was up to the operators themselves to decide how to do this. "The process whereby the allocations take place as they do, is a process that has been agreed by the telcos themselves. We have been sitting in on the meetings, but it is something the telephone companies have agreed on," an Oftel spokeswoman said.

She said exchanges with the fewest bidders were being opened up first and others would be added gradually.

"We want to make sure that local loop unbundling takes place within the timeframe of July 2001 at the latest, and we would like to see some availability from the new year and that is still on track," the spokeswoman said.

DSL technologies will turn residential lines into high-speed pipes for Internet and digital television services.

Oftel has previously been criticised for not moving faster on unbundling, which will end BT's last real monopoly and Wednesday head of Oftel David Edwards accepted that things night have moved faster. The European Commission has previously cautioned telecoms companies like BT that a failure to open the local loop to competitors could leave them open to attack under European Union competition rules.

But while RSL said it was withdrawing from the first round of bidding, pan-European data communications company KPNQwest announced it had signed a deal with BT to roll out its high-speed Internet services at the local level.

The company said it planned to introduce its DSL service in more than 20 of the largest British cities, depending on the outcome of the unbundling process.

Global Crossing and WorldCom were not available for comment at time of posting.

Reuters contributed to this report

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