Tiscali unbundling promises better services

Competition in the UK broadband market moved up another notch on Thursday when Tiscali announced it was ready to offer services in competition with BT Wholesale.

Tiscali has taken advantage of local-loop unbundling (LLU) to install its own equipment in BT's local telephone exchanges. Increased competition in wholesale broadband services — where competitors to BT have for the large part been notably absent — is likely to lead to improved services and even lower prices for homes and businesses. Easynet has already used LLU in some areas to offer much faster services than are available through BT's network.

Tiscali said it will have unbundled 27 London exchanges by the end of this week, and the company hopes to increase this to 200 — enough to cover many metropolitan areas — by the end of 2005.

Once exchanges are unbundled, Tiscali will be able to offer a wider range of services. At present, it is restricted to reselling BT's own wholesale broadband products.

Precise details of Tiscali's future plans were not immediate available, but it is thought that the telco is planning to target both businesses and consumers with services such as high-speed Internet access, VoIP and video-on-demand.

Tiscali's plans are also good news for Chinese equipment vendor Huawei, whose kit is being used in the unbundled exchanges. Huawei is proving popular with UK telcos at present — earlier this month it won a major role in the construction of BT's 21st Century Network.

Unbundling has the potential to break BT's grip on the 'last mile' of its UK telecoms network — the wires connecting individual offices and homes to the local exchanges. Last year Ofcom forced BT to cut its LLU prices in an attempt to boost demand.

On Thursday BT announced it was cutting the cost of migrating users onto unbundled services by 42 percent. Paul Reynolds, chief executive of BT Wholesale, claimed this was a sign that BT was committed to LLU's success.