Eye2Eye Pt II: Oftel's Edmonds on broadband

Last week Oftel issued a statement about local loop unbundling in which it laid out the terms and conditions for opening up BT's telephone exchanges. Operators will now get the chance to independently verify the telco's claims that there is no space for them in some of the more popular exchanges, and BT will face heavy fines if it is found there is enough space.

Stopping short of accusing BT of lying over the issue of space, Edmonds does admit that in his opinion there is plenty for everyone. He describes BT's behaviour over the whole unbundling issue as verging on the "obstructive" and admits that many of the services it has rolled out have come about as the result of "regulatory pressure".

He does, however, look forward to an era of affordable broadband for everyone.

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On the issue of local loop unbundling, it would seem that you are at odds with the EU's timetable, which is for services to be rolled out in January.

No, no. Name me an EU country that is going to roll out services?

I'm talking about the EU as an organisation wanting to see services in Europe rolled out in January. Now it may well not happen, but Oftel seems to be adamant that it can't possibly happen until July.

That is not the case. The EU regulation is one I greatly welcome and it does say that telephone companies as of January have to have an offer of unbundled services. In the UK we have had that offer since September. We now have a commitment by the incumbent to work with competitors so that some 600 switches will be unbundled for July. The original timetable was all about unbundling starting in July.

We pulled the timetable forward quite fundamentally not as a result solely of the EU regulation, but as a result of our own work. We invented for the UK the concept of local loop unbundling in November 1998. The EU produced its regulation only in the middle of last year. We had in place on BT a licence amendment, which in effect covers all the requirements of the EU regulation, in August of this year.

The EU is hugely supportive of the work that Oftel has done and believes that Oftel in many areas has set a lead on unbundling in Europe. The criticism that has been levelled that we are somehow falling behind the EU is totally and absolutely unsubstantiated.

Would you accept though that BT has deliberately made it happen as slowly as possible?

As I said to the select committee last week, in the middle part of this year I felt its [BT's] behaviour bordered on the obstructive. To deliver local loop unbundling, I think you need to treat the other telcos that want to link into your switch as a customer. You have to treat them as someone you value as much as you value a retail customer, and I think it took a long time for that concept to get rooted in BT.

In the middle part of this year, there were some very, very tough exchanges between BT and Oftel at senior and at working levels. My hope is that that is behind us. My hope is that their announcement two weeks ago of the planned 600 switch rollout, backed by my announcement last week in terms of the contract where I broadly found in favour of the competitors and insisted contracts be much tougher on BT, [will be enough].

Specifically on the space issue, in your dealings with BT, would you say that there is enough space in the exchanges and that BT's argument that there isn't is in some way flawed?

I think in the majority of exchanges there will be enough space. I think that many of the problems came because people were taking positions and had they done the survey work properly in advance that wouldn't have happened. What we are doing in Oftel is setting up a set of guidelines that will determine how space is allocated in the more popular exchanges which is another major step forward.

I am sure it will be seen yet again as Oftel responding to pressure. Not so it is something we have been working on right the way through September and October. The point is that where there is insufficient space the operators can commission an independent survey and if they demonstrate that there is space BT will have to pay compensation. BT will be bound on timetable.

If you are saying there is enough space and BT says there isn't, is BT just lying?

No. The original claims were based on paper surveys and what is clearly built into the process now is a proper survey where people go and look at it. Underpinning that will be a set of principles that we are writing here. And if there isn't space we are asking -- can you put it in the car park? Can you convert a broom cupboard? If there is no space whatsoever you have got to distance locate and we are analysing what that path will be.

It is regulatory involvement that has been more detailed than any before in the history of Oftel.

How many complaints have you received about BT in the last 12 months.

I don't know. We can probably find out.

Has BT in your opinion in the last 12 months on the issue of Internet access acted in the interest of the consumer?

That is a very interesting question. Take broadband first. BT has now rolled out its own ADSL product and I am not defending it -- let me preface it with that. BT has now rolled out its own broadband product to 620 exchanges which means that the consumer has an ability to take broadband for 40 percent of the country that didn't exist before. That is a big step forward in UK terms.

BT has also had to run a wholesale product so the consumer for the first time in the UK has had broadband potential which wasn't there before. On narrowband BT produced its first SurfTime product in June of this year and again the range that is opened to the consumer is much greater than it was before. From my perspective, this is a transitional period where clearly competition is coming into the market.

But weren't these things squeezed out of BT? They have come about through complaints or processes that Oftel had to negotiate. Has BT been the one that put them in place?

I would argue that many of them have come about as a result of regulatory pressure but you would have to ask BT the question as to the pace they would have rolled them out had it not been for regulatory pressure.

It would be wrong for me to say that BT has deliberately held back products from the consumer. That would be commercially nonsensical on their part, but the pace of rollout, the scale of rollout, you would have to put to BT.

But in your opinion?

I'm not going to sit here today and attack BT for being anti-consumer. It is my job to create conditions in the marketplace where there isn't competition.

Would you say that ADSL's reputation has been tarnished and if so what can we do about it?

ADSL only works up to five kilometres from the switch and if 35/40 percent of the country is more than that distance away it won't be provided, and sure that is an issue. In terms of the quality of the product I don't know. I have seen some complaints, there isn't very much happening in the UK at the moment and only time will tell. The fact is in America there are one and a half million ADSL users and after initial teething problems there are some good services. In Germany there are 150,000 local lines unbundled and services are improving. For me it is too early to say.

When can you envisage a time when all consumers have access to affordable broadband?

I think in much of the UK there will be affordable access. Fifty percent of the UK is covered by cable and in a relatively short time people will be able to have access via cable. BT is rolling out its own ADSL to 40 percent of country and there are wholesale products over and above that.

Is it affordable at £40 a month?

There is no reason why it should not be at the US level -- around $25 -- within the next two years. That is one of the reasons I am unbundling the local loop. Next year when local loop unbundling goes through you will see broadband rolled out at an increasing rate. Lots of consumers, though, will be perfectly happy with narrowband. In the UK we will be well up in the European [broadband] league table by the end of next year.

Go to Part III

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