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Oftel may back local loop bid

Earthlease may have found a sympathetic ear in its reported talks with Oftel today over its efforts to prise the UK local loop from BT's grasp
Written by Graeme Wearden, Contributor

Industry watchdog Oftel has said that it could support Earthlease's attempts to buy BT's local loop, if it was in the best interests of the consumer.

Oftel refused to confirm that it had been in talks with Earthlease on Thursday, as has been widely reported, and would not comment directly on the proposed deal. It seems, though, that if BT decides to accept the £8bn offer for its local loop -- the part of its network between local exchanges and individual homes and offices -- then Earthlease could get the nod from Oftel

"We'd be looking for benefit for consumers in any deal," an Oftel spokeswoman told ZDNet News on Thursday.

She added that Oftel's priority would be to examine whether such a deal would receive regulatory approval. "We would consider such a deal in the same way that we're looking at BT's restructuring. I can't say whether we'd be in favour of this specific deal or not," she said.

According to reports, Earthlease was in talks with Oftel over its proposed £8bn bid for BT's local loop, which it apparently first put to the telco back in July. If successful, it would lease access back to BT and to other telecoms firms, thus breaking BT's hold over the "last mile" of the UK's telecoms network. BT has roundly rejected the deal, describing it as "absurd".

Earthlease is a consortium headed by US finance house Babcock & Brown, which also includes American merchant bank Chancery Lane Capital. Financial backing is provided by JP Morgan Chase, Deutsche Bank and UBS Warburg.

Under "local loop unbundling", BT has to give access to this part of the network to any telecoms firm who requests it. However, the process has been notoriously slow and complicated, leading to repeated accusations that BT has been deliberately obstructing attempts to take away its control of the local loop.

Local loop unbundling is seen as crucial if competitively priced broadband services are to be widely available across the UK -- something the British government is strongly in favour of.

UK Internet service providers (ISPs) are reluctant to say whether they're in favour of the Earthlease deal or not, explaining that they'd need to see more details before commenting. Many of them have been vociferous in their criticism of BT in the past, and are desperate to see local loop unbundling speeded up somehow.

Vincent Pickering, head of regulatory affairs at Bulldog Communications, said he was surprised by the bid, but hopeful that it could solve some of the current problems with local loop unbundling. "If it lets Bulldog get more access to the local loop, then we'd certainly support it. Babcock & Brown are a serious operation, but I can't imagine that BT would happily give up the last jewel in its crown, even for £8bn," he said.

AOL insisted that something had to be done to improve the speed of local loop unbundling, but declined to say whether it supported the Earthlease deal, as it had not yet seen details of the plans. "We welcome anything that brings more competitions to the local loop. There's an urgent need for more competition in the telecoms sector, especially with broadband," said Matt Peacock, chief communications officer for AOL UK.

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