AOL questions Oftel's local loop pricings

Want broadband? You'll need a fat wallet according to AOL

Broadband services in a deregulated UK telecoms environment will be among the most expensive in Europe according to calculations made by ISP AOL.

The revelation comes in response to Oftel's cost plan -- announced Monday -- for alternative operators wishing to take over BT's phone lines. Local loop unbundling, where other operators install equipment in BT's local telephone exchanges has attracted much argument but is widely acknowledged as crucial for a cheaper and more competitive telecoms market.

AOL argues that while Monday's announcement will make narrowband among the cheapest in Europe it will put broadband at the high end of the price scale. Oftel intends to charge rival telcos £118 per year for every loop they rent from BT, with a £95 connection charge and a £1,433 fee for connecting their loops in the local exchanges.

These figures are very much the raw infrastructure costs making it virtually impossible to extrapolate consumer pricing.

While AOL is happy that the costs will make narrowband services cheaper, making broadband accessible to a mass market has always been one of the key goals of local loop unbundling. "What ISPs want to know from local loop unbundling is does price promote competition and allow new entrants to make a margin," says an AOL spokesman.

According to AOL's calculations the cost of a circuit will be £9.83. It is difficult at this stage to estimate how many users ISPs will put on a circuit, in turn making it difficult to translate this figure into a consumer price but AOL reckons it will put the UK "at the high end of the price spectrum in Europe".

Oftel denies this, claiming most European countries are yet to fix prices. "Prices have so far only been formulated in Germany and Austria so it is too early to say that," says an Oftel spokeswoman.

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One of the culprits for scuppering the free services must be BT who is sticking firmly to its June 2001 date for unbundling the local loop -- the last possible date by which it has to do it. Go to AnchorDesk UK for the news comment.

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