BBC NEWS Americas Africa Europe Middle East South Asia Asia Pacific Arabic Spanish Russian Chinese Welsh

 You are in: Business
Front Page 
UK Politics 
Market Data 
Your Money 
Business Basics 
Talking Point 
In Depth 

Commonwealth Games 2002

BBC Sport

BBC Weather

Thursday, 18 October, 2001, 13:15 GMT 14:15 UK
Watchdog caps BT charges
British Telecom telephone exchange
BT's 'local loop' is a gateway to millions of homes
Telecoms regulator Oftel has capped the fees that British Telecom can charge its competitors for using part of its telephone network.

The regulator's tougher approach is the latest in a string of measures aimed at boosting competition in telecoms markets.

The measures are in particular aimed at speeding up the growth of broadband internet services, which offer high-speed access and a permanent connection.

The Oftel decision forces BT to charge competitors less for annual connection fees, and denies the firm the right to charge in advance for preparing a site inside a telephone exchange.

BT's reservations

The news is likely to be cheered by BT's rivals, which have accused Oftel of doing too little to establish a level playing field.

Since the first BT exchanges were opened up in January to competitors, rivals have complained that the company has purposefully made processes lengthy and difficult.

Oftel says the charges announced on Monday are now more in line with the BT's costs.

But BT spokesman Ross Cook told BBC News Online that the telecoms giant had "some reservations about Oftel's assumptions".

He added that the changes were in line with expectations, and that BT would not be appealing, despite some points of disagreement.

"BT has got bigger issues to focus on," said Mr Cook, highlighting Oftel's recent proposals on 'co-mingling', where competitors would be allowed into BT's exchanges unescorted.

Waiting for demand

But the changes have come too late for some companies.

Out of the 40 companies which expressed interest in accessing BT's local loop a year ago, about 30 have given up, and several have gone bust.

There are now only five companies actively pursuing shared access to BT's local lines, with another five or so keeping in regular contact in order to weigh up future opportunities.

"Demand isn't as much as originally anticipated, but there are still companies involved," an Oftel spokeswoman told BBC News Online.

"We need to put the measures in place in the case that companies come back when the market picks up."

Financial restraints

The roll-out of broadband services has been much slower than anticipated.

But the logisitical difficulties of gaining access to BT's exchanges and wires are not the only thing that has held things up.

Demand from households has been much less than expected.

And the collapse of the telecoms share price across much of the sector has also limited the amount of capital that many telecoms companies can invest in new projects.

Direct access to every household

The row between BT and its rivals centres on 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.

See also:

23 Aug 01 | Business
Broadband fines threat to BT
02 Aug 01 | Business
BT bidders in talks with watchdogs
30 Jul 01 | Business
BT local loop 'not for sale'
27 Jun 01 | Business
Oftel orders BT to cut prices
13 Jun 01 | Business
BT hires demerger specialist
21 Mar 01 | Sci/Tech
MPs slate high-speed net rollout
Internet links:

The BBC is not responsible for the content of external internet sites

Links to more Business stories are at the foot of the page.

E-mail this story to a friend

Links to more Business stories