Ofcom caught in local loop unbundling
Regulator claims move will bring 'significant development' to market
Telecoms regulator Ofcom is reviewing local loop unbundling (LLU), claiming the practice could be critical to a competitive telecoms market in the future.
At the same time, BT has cut the costs of both shared and fully unbundled LLU products.
Ofcom said its consultation proposes a "significant development" of the LLU market to allow operators to create new and competitive high-speed data services based in the UK's local broadband exchanges.
The cost of LLU has been a bone of contention for many service providers, and BT's recent cuts have been welcomed by some ISPs. It is hoped that lower LLU costs will be passed on to the channel, although early reports suggest that ISPs will not pass on all of the cost savings.
"It is a start, but the pricing is the easy bit, and just one facet of LLU," said Richard Sweet, head of regulation at ISP Thus. "We would like to see the cost of LLU backhaul come down, as well as making migrating customers from IPStream to LLU made much easier."
Ian Fogg, broadband analyst at research firm Jupiter, said: "BT needed to drop prices, but it can drop them further still.
"However, it's not just about price; the devil is in the detail. BT has to make procedures, such as making it easier to get equipment in exchanges and simpler for ISPs to migrate customers to LLU services."
Ofcom said that, over time, IP networks will replace older ATM-based networks.
The regulator said: "The efficiencies offered by IP networks mean the local loop and local broadband exchange may provide much greater scope for infrastructure competition in the future.
"Ofcom therefore believes a renewed focus on the local loop will be critical in ensuring a fully competitive telecoms market for the long term."
BT's price cuts are largest for the costs of shared LLU packages, where BT continues to handle voice traffic and another firm handles data. BT said the price of this will drop by a total of 70 per cent and be phased in over the next six months in three stages.
Ofcom said it welcomes BT's commitment to that process and the telco's plan for a 70 per cent reduction in its charges to operators leasing unbundled shared local loops.