BT price cuts could ‘wipe out’ local loop unbundling

BT’s plans to cut the wholesale cost of DSL could signal the demise of local loop unbundling in the UK.

Richard Greco, CEO of Bulldog Communications – one of the few operators involved in LLU – said if BT goes ahead it could "wipe out" competition unless LLU costs also fall on a par with wholesale costs.

Ripping into BT's pledge to cut broadband costs Bulldog described it as yet "further monopolistic control of the broadband DSL market by BT".

Bulldog has already written to telecoms regulator, Oftel, claiming that "BT’s proposed pricing reductions would constitute further predatory pricing practice".

It believes that if BT cuts the wholesale cost of DSL then the result would mean "no choice, no differentiation in service offerings, and further monopolistic control of the broadband DSL market by BT".

Said Mr Greco: "BT is seeking to crush its DSL competition before it can even obtain a foothold.

"By slowing the local loop unbundling process to a crawl, while simultaneously rolling out its own service to 1000 exchanges, BT has already gone a long way toward driving DSL operators out of business and handicapping the few remaining competitors.

"The only way to ensure long-term value and choice for the British consumer is through competition. Oftel must act to stop BT from pricing that will enable it to establish a monopoly," he said.

Elsewhere, the industry has given a mixed response to confirmation that BT’s new CEO wants to see a "substantial" cut in the cost of wholesale DSL.

A spokesman for Freeserve, who said he was "a little tired of [BT] promises and leaks to the press that aren’t delivered upon", said he wanted to see some concrete proposals before commenting on BT’s move.

A spokesman for AOL UK was more optimistic. "Based on what we know, it may bring the UK closer to the day when ISPs can offer an affordable broadband product to consumers," he said.

BT is due to announce a package of measures concerning broadband within the next couple of weeks which are believed to include issues such as pricing and the roll-out of DSL.

While the issue of pricing is key, so too is the matter of availability. Earlier this week BT chairman, Sir Christopher Bland, told a group of MPs it could take 20 years before some rural parts of the UK are wired up for broadband. ®

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