BT may face £2bn bill for broadband delays

Has the UK's dominant telco been making it hard for rival operators to get access to the local loop? If so, the European Commission could hit it with a hefty fine
Written by Graeme Wearden, Contributor

BT could be hit by a £2bn fine if the European Commission decides that it has deliberately obstructed the development of Broadband Britain.

EC Competition Commissioner Mario Monti said last week that he is investigating the process of local-loop unbundling (LLU) across the European Union. Describing the pace of progress as "by no means satisfactory", Monti accused Europe's incumbent telecom operators of deliberately obstructing the delivery of unbundled lines to rival operators.

This, Monti said, has made it much harder for rival telecoms operators to launch their own high-speed Internet access services. He also claimed that incumbent operators had been taking advantage of their dominant positions to get their own broadband services out of the door.

For its part, BT puts the blame for local-loop unbundling delays down to the economic slowdown.

The EC treaty states that the Commission can fine companies up to 10 percent of their annual turnover if it believes they have acted in an anti-competitive manner. BT had a turnover of over £20bn last year, and telecom experts believe the company might fall foul of the EC investigation.

"BT should be concerned about Monti's speech," said Vincent Pickering, general council at Bulldog Communications. "I think shareholders will be worried if the Commission decide to proceed with an antitrust case against BT."

According to Pickering, the involvement of Mario Monti is an indication that the EC is taking local-loop unbundling seriously. "The EC will normally only get involved in a case such as this if there is a political will to take action. I think Monti's words show that he is inclined to pursue the issue. He's a very powerful figure within the Commission," he said.

The conclusions of the investigation into local-loop unbundling should be published by the end of this year. The EC will then decide which, if any, telecoms operators it will bring anti-competitive charges against. It's likely that any such cases would not be resolved until 2003, or later.

To some of BT's many critics, the question of whether it has been acting in an anti-competitive manner over local-loop unbundling is an open-and-shut case.

The Institute of Economic Affairs, a UK government thinktank, said back in February that BT was holding back the rollout of ADSL Internet access in the UK. Several of the company's rivals have claimed in the past that it gives preferential treatment to its own ISP in the rollout of broadband services.

A BT spokeswoman denied that the company has been deliberately delaying LLU, and pointed out that it has just installed ADSL broadband technology in its 1000th exchange, ahead of schedule.

"We think that accusations that we have obstructed the rollout of broadband access across the UK are unfair," the BT spokeswoman said, adding that the company had met or bettered all the deadlines set by both the UK and the EU.

According to BT, there are currently only seven companies negotiating for access to its local exchanges. At one stage 40 companies were expressing an interest. "We think that demand for access to the local loop will increase once the economic upturn begins," predicted the BT spokeswoman.

Oftel, the regulatory body for the UK telecommunications industry, admitted yesterday that BT could have moved faster to implement local-loop unbundling.

The "local loop" is the part of the telecoms network between local exchanges and individual houses and offices. "Unbundling" refers to the process where rival telecoms service providers can place their own equipment within the exchange, allowing them to offer services such as high-speed Internet access to consumers.

Recent figures for LLU showed that a mere 163 residential lines had been made available by BT to other operators.

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