Broadband rollout in crisis

Government and Oftel must act as unbundling flounders

The rollout of broadband services in the UK hit crisis point Tuesday as yet another operator -- World Online -- withdrew from unbundling, leaving experts demanding government and regulatory intervention to save the failing process.

Nine operators have now rejected unbundling -- in which telcos install their own equipment in BT's telephone exchanges -- leaving serious question marks over the whole process. High costs, slow rollout and unresolved quality of service issues are some of the main problems stopping operators embracing the system that was originally hoped to open up competition and lower prices in the broadband Internet market.

The government, keen to see universal broadband access, may now be forced to subsidise the process. Others have called on Oftel to offer operators cheaper ways of installing their equipment in BT's exchanges.

Co-mingling -- in which telcos put their equipment alongside BT's rather than in a seperate room -- has long been a bone of contention among the unbundling players. Some see it as a cheaper and more effective way of allowing operators to roll out broadband services but BT has always refused to allow it, claiming co-mingling would compromise the telco's mission-critical network.

Independent telecoms analyst Maeve Sullivan believes BT is talking nonsense. "There is no way other operators would endanger mission critical centres. BT has just had that culture all its life and it is difficult to give it up," she says.

Sullivan believes co-mingling is the perfect solution to the current crisis and would also solve the emerging town-and-country divide which ADSL services is creating. "Co-mingling could help in servicing less popular areas to ensure widespread installation of DSL," she says.

Oftel claims it is keeping an open mind about co-mingling and accepts that with fewer operators interested in unbundling it could be a better solution. ""Co-mingling isn't ruled out as an option. If there is just going to be one or two operators in each exchange it may be that a smaller space is more appropriate but it may not necessarily be that much cheaper," says an Oftel spokesman.

The government is keen to point out that local loop unbundling is just one of several options for the delivery of broadband services and remains unfazed by the amount of operators which are abandoning unbundling. "Thus didn't seem that serious so it is no great surprise that they pulled out," says a DTI (Department of Trade and Industry) spokesman.

However the government's recent auction of fixed wireless spectrum failed to attract operators and the DTI is due to publish a new strategy for broadband later this month. "It needs to be decided what broadband can do and why your granny in the Outer Hebrides needs it," says the DTI spokesman. "Companies will only spend money on something that has viable uses."

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