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BT to retain more control over fibre networks

'Virtual unbundling' must be temporary, warns EU

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BT will have tighter control over competitors' access to its new faster broadband infrastructure than it has over the old copper network, after the European Commission today approved new regulations.

Rather than the existing system of Local Loop Unbundling (LLU), competitors will access new fibre-to-the-cabinet and fibre-to-the-premises deployments via "Virtual Unbundled Local Access" (VULA). The arrangement was proposed to European regulators by Ofcom.

Under LLU, BT's competitors take physical control of the last mile of copper wire between premises and the local exchange, where they install their own equipment. This allows them to pass on large savings on the cost of transferring traffic from BT's network to theirs.

VULA will differ in that competitors will only get virtual control of customer lines, relying on BT's equipment in exchanges. The likes of TalkTalk and Sky - the most aggressive unbundlers on the copper network - would get some control over the configuration of the equipment.

Further, under VULA, Ofcom will not restrict the prices BT is able to charge competitors, claiming caps would stifle investment in fibre rollout. LLU charges are capped.

In its consultation on the plans, Ofcom said: "With regard to our proposals to allow BT flexibility in the pricing of its VULA products, we consider that this gives BT the opportunity to promote the efficient deployment and use of its new NGA network (and thereby recover the costs of developing it)."

BT has so far pledged £2.5bn to roll out faster broadband to two thirds of the country by 2015.

Ofcom said it expects VULA to last for "at least four years". Today the European Commission insisted it must be a temporary prelude to full LLU.

"In this specific instance, virtual unbundling seems the best option to safeguard competition and enable consumers to benefit from a wider range of services provided over next generation fibre infrastructure," said competition commissioner Neelie Kroes.

"However, this interim solution is not a long term alternative to physical fibre unbundling, which should be imposed as soon as possible."

Currently no major consumer ISPs except BT are offering broadband via the new infrastructure. The cheapest package on BT Infinity - its "up to" 40Mbit/s service, based on fibre-to-the-cabinet technology, which will cover about 75 per cent of the overall upgrade programme - costs £19.99 per month plus £50 connection. ®

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