Openreach slashes prices in unbundling push

David Meyer
ZDNet UK
June 06, 2006, 12:00 BST

After failing to hit a target of one million unbundled lines by this summer, BT's network services arm is taking measures to stimulate interest




BT Openreach has made it cheaper for other broadband operators to take control of its telephone lines, in a bid to boost the process of unbundling the local loop.

Unbundling gives other operators the opportunity to install their equipment in BT exchanges and offer different services to those offered by the telecoms giant's Wholesale arm.

Now, operators who make use of local loop unbundling (LLU) will see a 27 percent cut in the price of migrating customers from BT Wholesale's IPstream and Datastream to an unbundled line.

Openreach, the access services division of BT, was formed at the start of this year after regulator Ofcom forced BT to give up it what it viewed as a monopolistic approach to the broadband market.

Anne Heal, Openreach's managing director of sales, products and marketing, said the company was "fully committed to making LLU a success".

"This pricing reduction, along with the introduction of a new mass-migration product and the ability to transfer a customer's telephone number, will make it simpler for customers to move between operators," she said in a statement on Monday.

One reason for the move could lie in a target that BT was set by Ofcom in April. BT is not allowed to charge variable prices to different operators until July 2007, or until it reaches 1.5 million unbundled lines.

"We made a commitment not to change the pricing on IPstream until we hit that target," a spokeswoman told ZDNet UK on Monday.

Peter Black, the telecoms adjudicator, announced last week that the number of unbundled lines in the UK is nearing 500,000. However, the original target was for a million lines to have been freed up to competitors by this point, which suggests that unbundling has not been happening at the desired rate.

"The target that we had comes from an amalgamation from the targets of each of the operators," Black told ZDNet UK on Monday.

"We'd certainly hoped to be at a million by this spring or summer," he said. "Some of it is down to the operators not being quite as aggressive with their plans as they said they'd be."

Although Black said he was "fairly confident that we'll hit the million by the end of the year", he added: "Openreach have had challenges on this, particularly regarding backhaul, which is pretty fundamental.

"We can see the signs of recovery. The new management of Openreach have been very positive and open, and the problem has been slightly bigger than they anticipated," he said.

Openreach's spokeswoman told ZDNet UK that "in terms of LLU, a year ago people were sticking their fingers in the air", but promised that "the speed of progress has been accelerating and will continue to do so".

"By reducing the price we give industry the certainty to invest," she added.

"Ofcom's view is that the coming weeks and months are very important in the LLU process, and we're going to continue to monitor Openreach's progress very closely, [along with] the views of the telecoms adjudicator in relation to that process," an Ofcom spokesperson told ZDNet UK on Monday.