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BT to be one of first European Telcos to unbundle fiber lines

The telcos of the world will have issued a collective groan this week when they heard that Ofcom in the UK has announced a decision and detailed plans

By PETER WHITE

Published: 14 October, 2010

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The telcos of the world will have issued a collective groan this week when they heard that Ofcom in the UK has announced a decision and detailed plans to open up the BT Fiber lines, which it has been trying to lay right across the UK.

Back in 2008 Germany tried to pull a fast one putting together a deal to protect fiber lines from unbundling, in the manner that Verizon and AT&T managed in the US – it got its regulator to agree it could build out fiber, if it promised not to force it to let rivals use it.

The European Commission took the view that this was a no-no and has told anyone since that fiber needs to be unbundled as much as copper wires. Now Oftcom, these days one of the leading proponents of unbundling (because it has actually worked in the UK) has come up with a plan for unbundling fiber lines.

It consists of two separate things – first the creation of wholesale agreements by British Telecom for rivals to use a virtual superfast broadband line over its fiber. The technologies for giving a dedicated virtual link end to end over a fiber line have been in place for a while now and so are the network management protocols to ensure Quality of Service.

Secondly Ofcom will make BT open up its poles and ducts, with a rental charge, if rivals want to build out their own rival fiber. Ofcom thinks that if everyone is investing in fiber and not just BT, the investment can be shared around, and perhaps BT will be able to use these lines wholesale in return.

When BT first unbundled its local loop of copper lines, it massively overcharged and kept rivals out of the broadband business. Then Ofcom came up with the idea of doing a thorough costing exercise on those copper lines and imposed a price which it could prove was reasonable, from the outside. It was this step that has led to 7 million unbundled lines in the UK today.

With the fiber networks so recently built, all the costing data is in play already and BT can fill its fiber faster if multiple organizations such as Sky,Vodafone, Virgin and even mostly mobile companies like Telefonica’s O2 and Orange, are pushing customers onto fiber.

Virgin has already told members of the UK press this week, that it plans to use the BT ducts and poles to reach another 4 million homes with fast broadband.

Ofcom says that BT will be able to set prices for these new wholesale products which will include a fair return for the commercial risk involved. It believes that it may not have to intervene on pricing because they will be held down by competition, but in the last analysis are subject to anti-competitive pricing reviews.

BT won’t get out of local loop unbundling with these new steps and the prospect of unbundling a part of a fiber, alongside with the BT’s existing copper lines which carry the signal the last mile, is expected to be a common practice.

Super-fast, fibre optic broadband is expected to deliver 50 Mbps to 100 Mbps access and lead to new HD and 3D TV services and more interactive online gaming. BT plans to cover 66% of the UK with fiber by 2015 and Virgin Media has already rolled out 50 Mbps to half the households on its network.

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