LLU is 'uneconomic', says Energis

Won't invest in local loop

By Tim Richardson, 8th November 2004

Magic Quadrant for Enterprise Backup/Recovery

Energis has ruled out a nationwide investment in local loop unbundling (LLU), because, it says, the figures don't stack up.

In the summer the alternative floated the idea that it might install its kit in BT exchanges and provide telecoms services direct to end users. But today the company ruled out plans to invest in LLU, seemingly on the premise that its own strategy is working - or in other words, "if it ain't broke, don't fix it".

Said Energis chief exec John Pluthero: "LLU is uneconomic for national roll-out. It involves a significant up-front investment with no apparent return in any realistic timeframe. Frankly, we've got better things to do with our cash. "We're putting all our time and effort into executing our strategy. Yes LLU success could be good for consumers, but there are other exciting technologies that we will invest in which will offer our customers even more services."

Although Energis has rejected national investment in LLU, it may still consider unbundling individual exchanges if there was a genuine need. What's more, the company is examining wireless technologies that might prove an alternative to investing in LLU.

Its decision comes at a time when both Cable & Wireless and cableco NTL have both said they plan to invest in opening up BT's network. BT Retail - the consumer facing division of BT Group - is also considering investing in LLU, since it might mean it can compete more effectively with rival operators.

The cost of LLU has fallen by around 70 per cent over the last year and there is a renewed momentum to see LLU provide genuine wholesale competition. But critics say that operators will cherry-pick the most lucrative BT exchanges in densely populated urban areas. So while large towns and cities might expect new and exciting high speed services, the rest the country could be left behind in a new digital divide. ®