Local loop unbundling ‘massive flop’, says industry giant

Date: 01/03/01

AN EU law aimed at boosting access to the Internet by opening telecom networks to competition is proving to be a huge flop, warns the Union's biggest service provider.

The unbundling of 'local loops' is meant to give firms the chance to compete for access to homes without having to spend billions of euro digging up roads to build their own infrastructure.

Rival companies could use this access to offer ultra-fast 'broadband' Internet services with digital technology that soups-up the copper wire used in local phone networks.

But AOL Europe is arguing that the European Commission, which wrote the law adopted by governments at almost lightning speed last year, is failing to ensure it delivers the choice and lower prices that were promised to consumers. "Local loop unbundling has clearly been a massive disappointment," says Simon Hampton, the company's director of regulatory affairs. "With all the excitement and urgency to get it adopted, it is quite astonishing that there is nothing being done to make sure it is actually working."

The worst problem, claims Hampton, is the failure of member states to ensure operators share phone lines. This would allow consumers to keep their phone service with the old monopoly providers and use new companies for Internet connections.

"So far not one company has offered shared access," says Hampton.

The Commission is also concerned about implementation of the law. It has launched a survey of member states to see how the law has taken effect; the results will be unveiled at next month's meeting of Union telecom ministers.

"We are eager to see this implemented as soon and as effectively as possible," said a Commission spokesman. "Local loop unbundling is of crucial importance to competition, price and quality of Internet services in the EU."

In the meantime Hampton claims the EU executive should promote the spread of a UK system that has paved the way for 'unmetered' access to Internet services at a reasonable monthly rate.

The former monopoly British Telecom has been forced to offer Internet service providers (ISPs) access to its network at a special rate. ISPs can then offer 'flat rate' services for around €21-24 a month.

An EU law aimed at boosting access to the Internet by opening telecom networks to competition is proving to be a huge flop, warns the Union's biggest service provider.