Oftel confirms local loop unbundling fines

Regulation could see BT facing potential six-figure fines if interest in local loop unbundling ever resurges
Written by Graeme Wearden, Contributor

BT could face fines running into the hundreds of thousands of pounds per day if it obstructs the process of local loop unbundling (LLU), under rules finalised by Oftel on Thursday.

The rules, laid out in Oftel's "service level agreement" dictate the financial penalties BT will face if it fails to give other operators adequate access to its local loop -- the last mile of BT's network between local exchanges and individual homes and offices.

BT must pay compensation of £80 per working day if it is slow in allowing another operator to install equipment within an exchange. Once an operator has this access, BT must pay £10 for every working day that a local loop is unavailable.

With at least five operators still interested in LLU, and LLU potentially available from each of BT's 5,500 local exchanges, the fines could reach hundreds of thousands of pounds per day if BT was hit by a swarm of LLU operators simultaneously demanding access to large swathes of its network.

Such a scenario seems unlikely, given how few local loops have been unbundled so far -- but demand could soon increase.

It was originally forecast that demand for LLU would exceed 1.2 million lines. A mere 150 have been requested to date.

BT has begun running adverts in an attempt to boost broadband take-up and the government has committed £30m to aid broadband in the regions. If these initiatives work, then Britain could be in the lucky position of encountering a sudden surge in demand for LLU.

BT is understood to be "broadly happy" with the new rules. It has already completed the construction of a sophisticated automated system to handle LLU orders.

The charges were first proposed by Oftel back in August, and are not intended to be heavy-handed. "These figures are based on estimates of the likely loss to the operator," an Oftel spokeswoman told ZDNet UK News.

LLU allows operators to set themselves up as rivals to BT Wholesale, and would let them sell services such as ADSL to ISPs. At one stage, there was so much demand that it was predicted that over one million local loops would have been unbundled by the end of 2001. According to recent figures, though, only 150 loops have been unbundled so far -- mostly for testing purposes.

Rival operators accuse BT of following a policy of obstructing LLU for the last two years while it rolled out its own ADSL network -- so as to ensure a dominant position in the telecoms market.

BT denies this -- insisting the slump in the technology sector has discouraged rival telcos from LLU. It claims to have spent several millions of pounds on LLU -- including creating the automated ordering system capable of handling a great many requests from LLU operators.

"I am pleased to say that BT has met its deadline for providing an automated system, so there is at present no need for compensation for this," said Oftel director general David Edmonds in a statement.

BT would have had to also compensate operators had an automated system not been in place. Unfortunately, the meagre interest in LLU means the system is unlikely to see much action in the near future.

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