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Unbundling still stuck in the broadband mire

BT maintains an iron grip on the wholesale ADSL market as most of its rivals show little inclination to take advantage of local-loop unbundling, according to Oftel - which says it is happy with the situation
Written by Graeme Wearden, Contributor

BT still faces little serious rivalry in the wholesale ADSL market, despite repeated claims that the UK's broadband market is competitive.

In its latest Internet and Broadband brief, published on Thursday, Oftel has reported that a mere 4,600 telephone lines have been handed over to rival telcos through local-loop unbundling (LLU).

LLU was supposed to open up Europe's telecoms markets and break the dominance of the incumbent operators. It offers other companies the opportunity to take over customers' phone lines and offer their own services, rather than just reselling the products of the incumbent.

Oftel's report shows that the wholesale broadband market is dominated by just three providers -- BT, NTL and Telewest.

The two cable firms have over a million broadband customers, if users of NTL's controversial 150Kbps service are included -- slightly more than BT which hit the million mark this week.

The government points to the cable companies as proof that the British broadband market is competitive. However, NTL and Telewest's networks only cover 45 percent of UK homes and businesses, which is why LLU is so important.

But with just 4,600 lines unbundled, it is clear that BT is maintaining an iron grip on the wholesale ADSL market -- a situation which Oftel appears to be perfectly happy with.

"It's up to the market to decide how it wants to deliver broadband," an Oftel spokeswoman told ZDNet UK News, citing the boom in DSL take-up as evidence that Broadband Britain is in good health. "We're happy with the market as it is."

The main obstacle facing LLU is the large cost of acquiring the necessary space and installing equipment in a BT telephone exchange.

Operators that have embraced LLU include Easynet and Bulldog. Bulldog uses LLU to offer a 4Mbps broadband service from certain local exchanges in London.

In its last annual report, Easynet said that it had unbundled 81 exchanges by the end of 2002, and was aiming to unbundled another 75 this year.

BT is understood to have spent millions making LLU possible, and has seen scant return on this investment.

"We've been open for business for nigh on three years -- we can't force people to go for it. Maybe some organisations should have a look at the likes of Easynet. They, for example, they seem to be thriving with LLU," a BT spokesman said.

"Everybody is still welcome," he added.

At one stage, over 30 companies had expressed an interest in LLU. The crash in the telecoms sector made it much harder to find investment, but many operators accused BT of deliberately dragging its feet in an attempt to maintain its dominance -- a charge the company denied.

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