BT's local loop: a bungled unbundling?

BT has finally had its high-speed hand forced. Not that the telco's too upset, judging by the way it's been acting, says Tony Hallett

Earlier this week, telecoms watchdog, Oftel, insisted that BT must give other companies access to the local loop infrastructure as the UK's largest operator upgrades it, almost certainly for broadband digital subscriber line (DSL) services. Eventually, the telco must also let competitors into exchanges to extend the network themselves. The regulator's ruling stopped short of a complete opening-up of the local telephone network infrastructure, but it was still big news. For years, users have complained that BT has kept ISDN prices too high, and then delayed rolling-out any version of DSL for fear of cannibalising its ISDN revenues. In the meantime, Germany has become the largest Internet market in Europe on the back of cheap ISDN pricing, and now other areas such as Belgium and certain US regions are moving ahead with DSL. Indeed, figures released by Datamonitor last week forecast 21 per cent of all European businesses will use DSL to access the Internet by 2004. But in Britain, BT's reluctance to move to DSL could have proven a problem. Paul Adams, director of access, international optical products, Nortel Networks, said: "From a user's point of view, deployment [of DSL services in the UK] has stalled. We welcome unbundling, because it will do the end-user good, bringing multiservice offerings from new operators." But recently, BT has been giving the impression it's at the vanguard of technological development, claiming that unbundling is unnecessary. For example, a day before Oftel's statement, BT CEO Sir Peter Bonfield announced what he termed an "aggressive" roll-out of DSL technology supplied by Alcatel and Fujitsu. Four hundred exchanges, serving six million UK households and businesses would be upgraded. But as Robin Duke-Woolley, senior consultant at Schema, said at the time, BT looked like it was angling for last minute concessions from the watchdog. Whether BT really needs to worry is another matter. Erol Ziya, from the Campaign for Unmetered Telecoms (CUT), reckons Oftel's plan will allow BT to drag its feet. "You just have to look at the situation with LocalTel and BT where the smaller operator bought wholesale network capacity and BT was sluggish with processing the requests. This is indicative of how the first phase of this roll-out will result." Roger Tuckett, principal consultant at Ovum, takes a longer-term view. He agrees with Oftel and BT's claims that ironing-out technical difficulties may take 18 months or more, and that a wholesale sell off of the local loop might have been problematic. "The [Oftel] document is a good document. There's opportunity for an innovative range of pricing as competitors play their part." And according to David Edmonds, director general of Oftel, the doubters shouldn't be heeded. Referring to other markets, he said: "In the first stage we'll see catch up, and then overtake. I have a personal view that in the UK, by 2001, we will have a better communications network at a local level than any other country I have knowledge of." Oftel's document is just the beginning. Monitoring the unbundling - ensuring fair access to BT exchanges and lines at fair prices - will be paramount.