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Orange ditches unbundled broadband in favour of BT

Does the rise of fibre spell the end of local loop unbundling?

Does the rise of fibre spell the end of local loop unbundling?

Orange is to give up selling its own unbundled broadband later this year in favour of reselling services from BT.

The company's current broadband network, which serves around 840,000 customers, is based on local loop unbundling (LLU) - whereby Orange has installed its own network equipment in BT's exchanges.

But Orange last week confirmed it plans to move entirely to reselling connectivity from BT Wholesale following a review of its fixed line business. In a statement, the company said giving up on LLU would enable it to "take advantage of future technology developments as required".

Fibre optic cable

Orange is to move to reselling BT's internet access
(Photo credit: Shutterstock)

The move marks a significant shift for the UK's broadband market triggered by the rise of superfast connectivity, according to Forrester analyst Ian Fogg.

Fogg said Orange's decision represents "a sign of a change in the market overall as we switch from the first-generation of broadband to a new era - the whole market structure is set to change".

Broadband's new era is likely to be one of fibre. Last summer BT announced it will be spending £1.5bn investing in fibre broadband to bring speeds of up to 40Mbps - and even up to 100Mbps - to millions of UK homes by 2012. Meanwhile fellow ISP Virgin Media is also investing in higher speed broadband products including fibre and looking at ways to extend its network.

Fogg said the rise of these superfast broadband services is making LLU a less competitive prospect for ISPs - and predicted that more ISPs would join Orange in ditching unbundling.

"I think the way the market will go is we will see more ISPs going back to using BT's infrastructure and winding down their local loop networks. That's quite a likely outcome," he told silicon.com.

"The decision that Orange has made today is a decision that will be one of the options that TalkTalk, Sky and many other ISPs in the UK will be busy thinking about very hard."