2000 Roundup: The saga of unbundling BT's network

Unbundling has proved to be a bit of a nightmare

You could be forgiven for not knowing too much about unbundling of the local loop at the beginning of the year, but by now you should be totally familiar with the term. The issue is at the heart of the row over the cost of Internet access in the UK.

It is hoped that unbundling (which, just in case you didn't know, means allowing other operators into BT's exchanges to take control of the last mile of copper wire that runs into homes) will radically shake up the telecoms market, ending forever BT's monopoly. Hopefully this will pave the way to cheaper Internet access and accelerate the rollout of broadband services. However, it has not been a smooth ride, given the reluctance of BT to hand over the keys to its precious network and Oftel's often reactive approach to the issue.

In February the government made its feelings about unbundling clear when the chancellor called on telecoms watchdog Oftel to speed up the process. A day later Patricia Hewitt, the e-minister, interviewed on a train by ZDNet News, rushed to defend both BT and Oftel over the issue but hoped that the timetable could be speeded up by a couple of months.

By March it became apparent that there was a drastic difference of opinion between Oftel and the European Union. While the EU was keen to see unbundled services in place by the beginning of 2001, Oftel admitted July was the best it could do.

The following week the watchdog found itself at odds with the UK government as Tony Blair signed his name to an EU regulation calling for unbundling by January 2001 at the Lisbon summit. Oftel seemed to have been taken by surprise, claiming it had not been notified of any changes and sticking to its original deadline.

The process appeared to be moving on in April as Oftel announced the operators who would offer unbundled services. They included ntl, Telewest, WorldCom, Colt and Energis. Another operator, Fibernet, declared that unbundling would make it five times cheaper for operators to roll out services although it also accused BT of deliberately slowing the process down.

This was contradicted in May when Oftel announced the cost of renting lines as part of unbundling. Analysts questioned whether this would mean a reduced end cost for consumers.

While early summer was a quiet time for unbundling, by July the frustration over delays was building to a crescendo. The European Union was determined to speed things up, putting the weight of law behind the document signed in Lisbon.

This put Oftel head to head with the European Commision -- it claimed January was only a deadline for having the legal framework in place while the EC claimed it wanted to see services rolled out by January 2001. A consortium of telcos threatened legal action for what its saw as deliberate delays on BT's part. Fibernet claimed firms could sue BT for loss of business.

The Oftel/EC clash continued in August and the watchdog also firmed up the cost of unbundling, claiming operators would pay no more than £250 per year per customer.

In September the backlash against unbundling mounted. Business telco RSL pulled out of the process, complaining that Oftel was not doing enough to ensure fair competition. So too did high profile US telcos WorldCom and Global Crossing. It also emerged that only 360 of BT's 6000 exchanges would be available to new entrants.

Oftel threatened to launch its own inquiry and the watchdog itself came in for severe criticism for bungling the process. World Online accused it of pandering to BT by failing to open up the most popular exchanges, offering instead low-priority areas for colocation. In a strongly-worded letter, World Online called on director general David Edmonds to pull his finger out.

A host of high profile companies including Microsoft complained that BT was deliberately dragging its feet over unbundling, finding any excuse for why operators could not get into exchanges. This, said Microsoft, was damaging broadband competition. Colt claimed the process simply didn't work. Head of e-commerce at the Institute of Directors and former government adviser Jim Norton called for the sacking of BT boss Peter Bonfield.

It was the turn of Oftel director general David Edmonds to come under the spotlight in October when it emerged he would be hauled before a Trade and Industry select committee to explain the unbundling mess. The EC's battle to ensure a January timetable for unbundling moved a step closer as it was ratified by the European parliament and although there was no formal announcement, it became clear that Oftel had shifted the goalposts to come in line with the EC.

November was the month the watchdog bit. It issued revised prices for renting local loops and also stepped in to the increasingly acrimonious row over how space should be allocated in exchanges. Under the new rules BT could be fined if it failed to stick to agreed timetables and operators were allowed to seek independent verification about BT's lack of space claims. In an interview with ZDNet News, Oftel's director general David Edmonds denied that the watchdog had only got tough on BT because of pressure from the EU.

In December cable companies Telewest and ntl dropped out of the unbundling process, claiming they couldn't justify the costs. Energis also announced it would be scaling back its investment and was more forthright in laying the blame for its decision at BT's feet.

It is an indication of how badly the process of unbundling has messed up that the regulator, Hewitt, and Bonfield, have all ended the year being hauled before a government select committee to explain their actions. Oftel describes BT's behaviour as "bordering on the obstructive", the select committee describes Oftel as "lazy" and yet when BT faced the music the committee seemed to let it off the hook.

Most operators agree that the laborious process of opening up BT's network is now back on course but with doubts about how much it is going to cost, there is no guarantee that unbundling will be the competition panacea hoped for at the beginning of the year.

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