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Carphone talks tough on LLU deadline

Get it right - or else

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Analysis It's been just over 24 hours since Carphone Warehouse announced details of its cut-price bundled telecoms and broadband service - and the war of words has already escalated to threats of legal action.

The Times reports that Carphone would be prepared to sue BT if the monster telco failed to meet its June deadline for a new local loop unbundling (LLU) delivery system designed to automate the complex process of unhooking customers from BT's network onto LLU operators' networks. Without such a system, migrating thousands of customers would cause a major headache for telecoms operators.

If this system is not up and running on time then Carphone will be losing money on its £21 a month all-in offer for calls, broadband and line rental. And the firm is not prepared to foot the bill.

"BT will owe the difference between IPStream (the wholesale end-to-end broadband product BT flogs to ISPs) and LLU for every customer that should have been switched over," Carphone chief exec Charles Dunstone told the paper.

He ain't kidding either. One of the interesting comparisons made over the last few days is how Carphone's "free" broadband offer is being likened to the impact Freeserve (now Wanadoo) made on the UK's net sector at the end of 1990s with the introduction of subscription free services. There's also another similarity. Just like Freeserve, Carphone is also feisty and prepared to challenge the former monopoly at a time when other operators and ISPs prefer not to rock the boat.

Earlier this year BT launched Openreach - a new division designed to give all operators equal and transparent access to the BT network. Less that a month after Openreach adopted its new role Carphone lodged a formal complaint against Openreach with Ofcom claiming that the charges imposed for the bulk migration of fully unbundled lines were "discriminatory" and in breach of Openreach's "obligations".

The problem for Carphone is that while LLU changes the economics of providing telecoms services, making it possible to cut bills in half, LLU is a nightmare to get right.

Migrating consumers onto LLU networks is complex and there are plenty in the industry who believe Carphone has underestimated the challenges involved.

But according to BT, the telco is "fully committed to seeing LLU a success" and is "committed to continuing our work with the industry to improve the operational processes surrounding LLU".

Surely, that's enough to give people confidence in LLU?

Maybe not. Earlier this week the Office of the Telecommunications Adjudicator (OTA) said BT's delivery of backhaul - the lines that link unbundled exchanges to rival operators' networks - was "still unacceptable" and that "this has been an outstanding issue for some time". At the moment, plans are in place to speed up the process and clear the backlog, but delays are still being measured in months, not weeks. And it was only six months ago that the OTA said operational problems "continue to persist...giving significant cause for concern".

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