BT (British Telecom) has proved as incompetent as Tube Lines and Metronet, the companies responsible for maintaining and upgrading the London Underground Jubilee, Northern, Piccadilly, Bakerloo, Circle and Victoria lines.
Not an easy feat, but BT’s failure to adequately open its network (unbundled its local loop) is a major blunder which BT should have predicted and planned – given the strong growth and demand for broadband services during the past 36 months.
Back in November 1999, OFTEL (now known as OFCOM), the UK telecommunications regulator announced BT would have to unbundle its local loop, effectively allowing competitors to install their own lines in BT telephone exchanges.
The process by which operators install their lines in BT exchanges to provide telecoms services direct to end users is referred as local loop unbundling (LLU). Currently, BT offers two types of unbundling services - the bulk migration of fully unbundled (MPF) and shared access (SMPF) lines. Fully unbundled lines are where the LLU operator, for example Bulldog, takes full control of a phone line to a home or business providing both a broadband and phone service. Shared access is where the LLU operator provides the broadband connection, but the phone service remains hooked up to BT's network. In the case of both MPF and SMPF, the maximum amount BT is allowed to charge operators for migrating individual lines in bulk is £34.86 per line. In its "draft determination", OFCOM has ruled that the maximum charge BT should impose for the bulk migration of fully unbundled lines should be £29.06.
A BT spokeswoman was quoted admitting to BT’s inability to manage the demand for local loop unbundling “There is currently a demand to unbundle 20,000 lines a week and we simply do not have enough engineers to deal with this effectively. This has resulted in a growing volume of network faults.” BT’s excuse for the problem of unbundling was down to a “shortage of telecoms engineers”. The task of completing the local loop unbundling cannot be underestimated, however BT was given substantial allowances, including the creation of OpenReach. BT Open Reach is the division that runs the copper in the ground, giving equal access to LLU players and BT Wholesale.
Regardless of the impact on BT’s competitors and other broadband providers, this delay in unbundling could cause a halt to the growth of broadband in the UK. Furthermore, it is important to acknowledge BT Openworld (BT’s broadband service) is owned by the same group at BT Retail. This is surely a conflict of interest which could potentially lead to BT favouring its own services to the detriment of its rivals. Furthermore, given the demand for unbundling, the cost might rise. Sky's Easynet unit says it costs on average £40,000 ($74,600) to £50,000 ($93,252) per unbundled exchange.
Lastly, BT’s failure to provide adequate and timely resource to unbundling its network has lead to delays in the growth of services in Ireland. BT Ireland CEO Danny McLaughlin said that in April 2005 his company announced plans to invest over 100 million Euro in its network over a three-year period, but as yet had invested barely a tenth of that amount as a result of delays in unbundling the country’s phone networks.
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