Telecomms unbundling – watching the watchers

2000-06-15

The UK’s telecomms watchdog, OFTEL is between a rock and a hard place. Back in March, it confirmed that the 1st of July 2001 loop was to be the “absolute deadline” for the unbundling of the local loop. At the same time however, PM Tony Blair was in Lisbon signing up to a pan-European agreement that fixed the deadline for the end of 2000. Now it is looking like the EC will hold OFTEL in breach of directives that are hastily being drawn up to carry forward the Lisbon agreement. A storm is brewing, and it looks unlikely to be the last for poor OFTEL.

This will not be the first time OFTEL has fallen foul of European directives, but the third. The watchdog has already been held to account for its less-than-agile approach to competition in the mobile market, not to mention an ongoing issue surrounding carrier preselection, that is the ability to use another telephone company without entering additional digits at the dial tone. As if it were not enough to be accused of sluggishness by the EC, when it acts, it is accused of pandering to the incumbent telco BT and penalising UK businesses in the process. At the end of last week, OFTEL’s attempts to kick-start the stalemate over the xDSL rollout were met with incredulity by some members of the Spectrum Management forum, set up by OFTEL itself to keep momentum in the unbundling process. Already, OFTEL is expressing fears about missing the unbundling deadline and this is without taking into account the fact that, according to the EC, it has already slipped the date by six months.

Not everything that OFTEL has done has been seen as such a bad thing, however. The decision made at the end of last month, that BT SurfTime was uncompetitive as BT did not offer a wholesale version of the product, was hailed as a “victory for consumers,” according to \link{http://www.zdnet.co.uk,ZDNet}. ISPs can now re-sell BT’s SurfTime in whichever way they choose: this will effectively open up the market to a whole new wave of unmetered access deals. This has both up- and downsides – on the upside, prices will come down still further than the currently offered deals; however the complexity of the market will no doubt increase, while the quality of service may drop in the short term anyway.

Whatever the final date for unbundling, be it Christmas or the middle of next year (and we rather suspect the former, after all Tony Blair is never wrong), the pressure gauge will rise and OFTEL will have no choice but to accept its share.

(First published 15 June 2000)