Oftel calls industry summit

Too expensive: High-speed internet access in remote places

A crisis is sweeping the UK telecoms industry as ever more companies abandon their plans to offer high-speed internet access.

The number of firm orders placed was less than that originally bid

Oftel spokesman

The telecoms regulator Oftel has summoned industry officials for a meeting on Thursday to find out why so much is going wrong.

The meeting was called after Bulldog Communications said on Tuesday that its roll-out of fast internet access DSL (Digital Subscriber Line) equipment will be much slower than initially planned due to prohibitively high costs.

Also on Tuesday, the Dutch telecoms company Versatel said it had abandoned its plans to offer DSL services in the UK.

Earlier, RSL Communications pulled out, blaming Oftel and the incumbent British Telecom for dragging their feet.

Local loop unbundling

Oftel recently forced BT to open up 25 exchanges after its competitors had pushed for permission to install their DSL equipment.

The roll-out of local broadband networks is slow

This so-called local loop unbundling aimed to introduce competition on the telephone lines linking BT's local exchanges to homes and businesses.

But when it came to the crunch, only one or two companies put their names forward to roll out broadband links from each exchange.

And only 14 of the exchanges received firm commitments from DSL companies which wanted to install their kit.

"There is a special meeting to discuss the outcome of the first round of orders for co-location of equipment at the first 25 sites," an Oftel spokesman said.

"The number of firm orders placed was less than that originally bid."

Oftel's questions

Oftel will ask why the companies have pulled out.

Analysts say it has a lot to do with the 25 exchanges' location.

They tend to be rural, which means the companies rolling out local loop networks will have fewer customers to sell their service to.

This makes it more difficult to make money, the DSL operators said.

BT will open up 360 exchanges to its competitors in the first wave of unbundling, but this offering will recieve much less interest than its second wave which will include city centre exchanges.

BT too expensive?

DSL operators that wish to install their kit in a BT exchange must pay to convert a room into a "hostel" that will house their broadband equipment.

The operators have agreed to share the £200,000 cost.

But even if seven operators were to apply for access to each exchange's unbundling, the cost would have been almost three times higher than in Germany, said Bulldog Communications.

As it is, only one or two operators have applied for each, raising the cost to at least £100,000.

BT rebutts criticism from the DSL operators, insisting that it has done everything Oftel has asked it to do to pave the way for more competition.

Technology gap

The rejection by DSL operators of rural exchanges means the roll-out of broadband will be slow and patchy.

This creates a technology gap between cities and the countryside.

"People in rural areas and rural businesses are in danger of being left behind," said John Burns, head of enterprise and regeneration at the Countryside Agency, the UK government's agency set up to promote rural concerns.

It is an issue for all rural activity that need to use data links

Alan Denbigh
Telework Association

It is becoming increasingly difficult for rural teleworkers to link into the office systems of the companies they work for, and for small firms in the countryside to transfer data and access modern websites, according to the executive director of the Teleworkers Association, Alan Denbigh.

"It is an issue for all rural activity that need to use data links," he said.

The problem, according to Mr Denbigh, is that the Universal Service Obligation set down by the UK telecoms regulator Oftel only obliges telecoms companies to offer basic telephone services - not state-of-the-art internet link-ups.

This problem is taken seriously by the Countryside Agency which has asked Oftel to widen the remits of the Universal Service Obligation to include broadband services.

International technology gap

Similar technology gaps are also appearing internationally, between those countries that are committed to the roll-out of broadband technology, and those that lag behind.

On Tuesday, the Dutch telecoms company Versatel announced it was abandoning plans to offer high-speed DSL internet access in the UK and France.

Instead the company would focus on Germany and the Benelux countries.

Broadband is already widely available in the United States and in many European countries.