Technology media & telecoms
6 August 2001
1 October 2001
5 August 2002
8 October 2001
5 November 2001
25 March 2002
So, the unbundling of BT's local loop was due to be resolved by July. And is it? Is it heck. The ever-lengthening process of negotiation between BT and operators is fast resembling a playground fight over who gets to play with the skipping rope. Of course, the comparison is a little unfair, but in both cases the parties have found themselves tied up in knots.
In any contract dispute, lawyers are the first to be called, and the unbundling discussions have been no different. BT has put the full weight of its in-house contract negotiating team behind its efforts, while the operators are represented by Field Fisher Waterhouse. The latter caused something of a stir last year when it won the mandate to act for the consortium of telecoms companies interested in gaining access to BT's hitherto impenetrable local loop.
An unexpected choice, the firm may have been against competition from City big boys Allen & Overy and Clifford Chance, but it has nevertheless gone the distance. Tony Ballard and his team are finally poised to conclude the Oftel-refereed bout with BT after one more consultation paper and determination from the telecoms regulator. It could, however, be construed as slightly unfortunate that just as the deal seems close to completion, interest in the unbundled network from a sluggish telecoms sector has begun to wane.
For those following the unbundling tale with less than avid interest, the wire connecting your house to the local telephone exchange has historically been owned by BT. This is the local loop, and given BT's ownership, other telecoms operators have been unable to offer services without being beholden to BT. Local loop unbundling is therefore considered the impetus behind increased access to high-speed digital internet services. The theory is that by allowing other operators entry, thus enabling them to provide broadband internet access, competition for asymmetric digital subscriber lines (ADSLs) will be generated.
BT says 50 per cent of UK households have access to an ADSL, and that after the furore surrounding its unbundling, only three of the many companies seeking to gain access have been active in pursuing the opening and only nine of the original 40 prospective competitors are still interested. (The original 40 included WorldCom, Cable & Wireless, NTL and Colt Telecommunications).
The unbundling necessary for BT's compliance with Condition 83 of its new licence and European Community (EC) regulation, requiring incumbent operators to make local loops available, initially generated considerable interest when it was revealed last year. Although it has effectively been unbundled, a series of discussions has ensued and the process has yet to reach its end.
Why is there still a problem? The main source of contention has arisen from the service level agreement (SLA), which imposes contractual obligations on BT. Operators are not going to enter into lease agreements if they are uncertain about the specific level of service required of BT. During the unbundling process, Oftel has made two determinations on this contract. In-house counsel Vincent Smith has provided the bulk of Oftel's legal advice, seeking assistance from Theodore Goddard where necessary. Edward Pitt provides the link between the two, having joined Theodore Goddard from the telecoms regulator in 1998.
The saga continues, as Oftel has now to make a third determination concerning the SLA contract. Although the full commercial rollout of local loop unbundling was planned for July, it was not a definitive obligation that parties could be held to. The question asked by the operators was whether BT has created a set of rights and obligations in the contract that reflect the state of play in a commercial context. Field Fisher's clients would probably say that it has not done so; thus Oftel has once again entered the proceedings.
The time has come to ask whether, after this latest consultation and determination, it is necessary for Oftel to take a more proactive approach to the discussions. Upon making its determination, Oftel has the choice of leaving the parties to implement the changes on their own, or of taking a more active role in directing the contract. Smith has yet to decide on Oftel's strategy.
If nothing else, the unbundling process has shown that the more people who are involved in a deal, the greater the chance of failure to reach accord. If this latest round of consultation is not able to stimulate agreement, Oftel may have to take the skipping rope away and decide who gets to play with it and when.
Kathryn Hobbs, reporter