Unbundling on course, but so was the Titanic

2000-07-21

Unknown to its navigator, the Titanic was several miles off course when it ran into difficulties with ultimately tragic consequences, seeing its doom for the first time only as the mother of all icebergs loomed out of the fog.

Consider recent events surrounding handling of the unbundling issue. Both BT and Oftel are sending out mixed messages with respect to both opening up exchanges and roll-out of ADSL services. We only have to look at a single recent story on VNU.com to get the picture:

• “The EC has proposed a draft law requiring European Union member states to unbundle their local telephone networks by 31 December 2000”

• “Oftel … is "well on schedule" to meet the December 2000 deadline, even if unbundled services wouldn't be widely available by then” – a contradictory statement in itself and one which falls short of EC requirements

• “A BT spokesman said the company is on course to meet the deadlines agreed with Oftel, and unbundled services would be working by 31 July 2001.” – another contradictory statement, considering Oftel’s “well on schedule” remarks above.

Other information in the press and on Oftel’s web site muddies the icy waters still further. Rival telcos are to gain only limited access to local exchanges between now and the end of the year, with up to a hundred to be made available for “pilot projects.” The concept of a pilot project does not sit well with that of a “limited service” – Oftel’s term to describe what would be available by year-end.

Clearly it is in BT’s interest to slow down the process in any way it can. ADSL is a key element as it is the “killer app” that will give subscribers real reason to transfer allegiances, hence BT can use any time it has left to roll out ADSL kit to local exchanges, giving its OpenWorld service the incumbent position (“Why wait months for the competitor service? Sign up with BT today!”) and also tying up valuable floor space in the local exchange. Let’s face it, no company with any nouse would open the doors to the competition before getting its own act together. Unfortunately for BT, past delays in its ADSL strategy have got the company into the situation it now finds itself. It is running out of time, and even the timescales it thought it had agreed were cut by six months in Lisbon.

Meanwhile, the competition are not just settling back and taking this. BT are treading a fine line, as if it can be proved (and it would not take much) that BT are damaging the business of other telcos, they could be sued for enormous sums. Companies considering legal action are Fibernet, Colt Telecommunications and Global Crossing; it is likely that others will follow suit.

So where’s the iceberg? The hard deadline is the end of 2000. Neither BT nor Oftel are happy with this, but they do not have much of a case. The EC will not allow BT to restrict its rivals as it is currently doing, nor will the competitors themselves. The difference with the Titanic is that the navigator did not know that the ship was off course, and nobody could have seen through the fog guessed the scale or potential damage that the iceberg could have. In this case, however, there is no fog, only a smokescreen from a company trying in vain to protect assets it no longer really owns.

(First published 21 July 2000)