Broadband fines threat to BT

BT's 'local loop' is a gateway to millions of homes

The UK telecoms watchdog Oftel is seeking to bring in tougher penalties on BT in an effort to speed up the growth of broadband internet services.

The watchdog's move should cheer telecoms firms who have accused it of doing too little to stop BT dragging its feet in the final stages of opening up the UK's telecoms sector.

It is clear that Oftel intervention is required to ensure that BT offers satisfactory service level agreements

David Edmonds
Telecoms regulator

Oftel has decided - following a host of complaints - that BT's level of service had not been satisfactory or reasonable, a spokeswoman from the watchdog told BBC News Online.

The complaints from rivals say BT is manipulating its position to stop them eating into its lucrative monopoly on local phone services.

When asked about the accusations, a BT spokeswoman told BBC News Online that the opening up of the first 40 local exchanges has all occurred within the necessary timeframe and in line with the contractual agreements.

Deliberate delays?

But the firms involved maintain that BT has done everything it can to bar competitors from offering broadband, or fast internet, services.

Since the first local telephone exchanges were opened up in January this year, competing telecoms firms have complained that BT has been purposefully making the process lengthy and difficult.

It smacks of closing the barn door after the horse has bolted

Kevin Fogarty
Telecoms analyst

And although BT claims all its services have been satisfactory, Oftel's proposed changes centre on ensuring greater speed and efficiency.

But the measures will come too late for many of the companies who lodged the complaints.

Out of the 40 companies which expressed interest in accessing BT's local loop a year ago, 31 have given up and several have gone bust.

Too late?

"It smacks of closing the barn door after the horse has bolted," said Kevin Fogarty at Teather & Greenwood, "these kind of measures should have been put in place when there were a lot of people knocking at the door."

"The whole [broadband] market has now swung to BT's favour."

Telecoms firms have complained of unnecessary delays

The row is over access to the so-called "local loop," the last mile or so of wire between telephone exchanges and homes.

BT's local loop has 5,500 exchanges connecting more than 25 million customers to the BT network.

Although viewed by some as an archaic piece of 'old technology', the local loop's value to cable and internet operators is potentially enormous, as it gives a direct line into every household in the country.

Under deregulation laws dating back to November 1999, BT is forced to offer local loop access to its competitors.

Compensating lost time

Oftel is proposing that, where there are delays, BT must pay compensation which reflects the revenue lost by the other telecoms companies.

If the proposals are pushed through, BT will be forced to pay £10 for each working day a local loop is unavailable and £80 for each day that operators are not able to share exchange facilities with BT.

It is the first time that the telecoms regulator has formally intervened to set standards of service.

But BT says it was not surprised that Oftel had chosen to take action, and that the proposals were well within its expectations.

Oftel aims to introduce the tougher penalties before 5 November following the mandatory consultation period.