Broadband backlash building for BT

Oftel to launch unbundling inquiry, rivals may sue British Telecom

British Telecom (quote: BT) could face an industry backlash over its sluggishness in allowing competitors into its local loop monopoly, with regulator Oftel planning an inquiry and rivals considering lawsuits.

Companies considering legal action could include Colt Telecom (quote: CTM), Energis (quote: EGS), Kingston Communications and Thus (quote: THUS), according to a report in Monday's Financial Times. The paper quoted Angus MacSween, chief executive of Scottish telco Iomart, as saying his company would sue BT on its own or as part of a group if the situation does not improve.

Separately, Oftel has said it is planning a probe of the local loop unbundling process. According to Sunday's Observer, the telecoms regulator will consult with telecom firms this month and then investigate a random selection of BT's 5,500 local exchanges across the UK.

BT, like other European and US incumbent telcos, is in the process of giving competitors access to the last mile of telephone wiring connecting homes and businesses to the telephone network. Rivals want access in order to offer innovative services such as flat rate dialup Internet access and broadband, digital Internet connectivity. Without access to the local loop, competing telcos have no choice but to resell BT's own services.

Critics say the unbundling process is going far too slowly and that European and US telcos have made more progress. BT has been accused of keeping some of its best exchanges for its own use, shutting out competitors with claims the exchanges are already full. The company has "blacklisted" more than 400 exchanges.

Oftel has come under fire itself for failing to drive the process ahead quickly enough, and some competing telcos claim it is accepting BT's assertions without criticism. Some US telcos have opted out of the process, potentially reducing consumer broadband choice.

Oftel has denied it is allowing BT to control the unbundling process.

More details to follow.

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