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BT faces £400 million LLU compensation bill a year

That's a relief - could have been £142.5 billion

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BT could be forced to pay rival telcos £400 million a year if it fails to meet agreed levels of service concerning local loop unbundling (LLU).

Details of compensation payments for operators involving loss of income or profit were published by Oftel today and form part of the framework for LLU.

Under the new rules, BT's liability will be capped at £500,000 per exchange to a maximum of £20 million per operator a year.

On the basis that there are some 20 operators still involved in LLU, this would cap BT's liability at £400 million a year.

In a submission to Oftel in December (Local Loop Unbundling - Proposed Determination Of The Terms Of An Access Network Facilities Agreement) BT warned that in the worst case it could face compensation claims £142.5 billion a year if its liability remained uncapped.

Of course, all this talk of compensation is academic because BT is a world class company that has the full backing of the E-minister and Minister for Textiles, Patricia Hewitt. She wouldn't offer her support if she thought BT was going to shaft its rivals.

And let's not forget Oftel. It's hawk-eyed servants are watching every move BT makes to ensure that it complies with its licence.

The five key points to today's determination are:

- if operators do not need all the space they order, they will be able to trade space in exchanges with each other, rather than returning it to BT
- BT will have to pay immediate compensation to operators if service levels are not met;
- operators will have the right to refer disputes about the provision of LLU to an independent expert under a new dispute resolution procedure. This is in addition to the right to refer major disputes to Oftel under BT's licence;
- operators and BT must agree levels of service to ensure that BT provides operators with reasonable service on a non- discriminatory basis;
- BT's and operators' liability for lost profits or income has been capped to ensure that claims are within reasonable limits.

In a statement, Oftel Head Boy, David "Harry Potter" Edmonds said: "Oftel's determination provides operators with added confidence to proceed with local loop unbundling in the knowledge that the terms and conditions within their contracts are fair."

He also crowed that "operators are now placing firm orders for unbundled loops." Which is true. What he didn't say was that they are only placing orders in four trial exchanges. An Oftel spokesman was unable to say how many orders had been placed. Hardly the stuff of legend, is it? ®

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