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Last Updated: Thursday, 4 August, 2005, 09:39 GMT 10:39 UK
Net providers loosen ties with BT
By Jane Wakefield
BBC News technology reporter

Person in front on a computer
People can look ahead to broadband picking up speed
Broadband is getting faster as internet providers start to offer customers speed upgrades for no extra cost.

Some providers are considering loosening their ties with BT altogether and offering broadband via their own equipment.

The process, known as Local Loop Unbundling (LLU), gives control of part of the network which connects customer to their local exchange to BT's rivals.

The French Internet Service Provider (ISP) Wanadoo has announced it will trial the technology this summer.

Telecoms watchdog Ofcom has previously said that LLU is the most effective way of "delivering more innovation, greater choice and lower prices in broadband".

Put simply, it allows operators the chance to offer higher speeds, lower prices and extras such as cheap net telephone calls, without having to wait for BT to offer them first.

French tests

The majority of ISPs still buy their broadband services wholesale from BT.

According to Ofcom, less than 1% of ADSL broadband in the UK is currently offered via LLU.

BT engineer inside a telephone exchange
The process involves swapping wires inside the telephone exchange
But a 70% reduction in the price of the moving to LLU announced by BT late last year has kick-started the interest.

Ofcom estimates that the number of unbundled lines has increased six-fold since May 2004.

Wanadoo is initially trialling LLU in Leeds with 500 customers. If successful, it could initially offer the service in around 200 telephone exchanges, which will cover roughly four million homes.

The firm is owned by France Telecom which already offered LLU services in France, allowing it to see both the benefits and pitfalls of the process.

"It will have learnt lessons from the French market where LLU has exploded," said Ian Fogg, an analyst with Jupiter Research.

Other ISPs will watch developments with interest.

"Many are asking whether it is now the time to move into LLU," he said.

Customer frustration

Mr Fogg does not believe LLU is quite ready for the mass market, due in part to issues in migrating customers.

Last month Ofcom received over 100 complaints from Bulldog customers, a pioneer in LLU which has been offering services since 2002.

They included some customers who had been left without a telephone service for up to two weeks.

"The process is not quite as simple as unplugging customers from BT's network and plugging them back into ours," explained David Ferguson, Bulldog's marketing director.

"There have been some cases when the process has taken longer than we would want and that can be frustrating for customers," he said.

Eight meg is pushing the edge of existing ADSL technology
Ian Fogg, Jupiter Research

He said Bulldog was "working with BT to resolve the issues".

One of the problems for Bulldog is that it is taking over complete ownership of the copper wires means providing a telephone service as well as a broadband one.

Despite the issues, LLU has brought benefits for Bulldog and another LLU provider Easynet.

UK Online, the internet service provider owned by Easynet, became the first ISP to offer 8Mbps (megabits per second) broadband at the end of 2004.

Last month Bulldog upgraded customers from 4Mbps to 8Mbps at no extra cost.

Faster net

Staying ahead of the game will become increasingly crucial for LLU providers as broadband becomes more and more competitive.

BT is keeping up the pressure, with its 8Mbps services expected to go live at some point this year. This will, in turn, be passed on to service providers that take their broadband wholesale from the telco, making super-fast broadband a reality for many.

According to Jupiter's Ian Fogg, the introduction of speedier services could bring its own problems.

"Eight meg is pushing the edge of existing ADSL technology," he said, suggesting some lines may not cope with faster services.

LLU providers will have to keep ahead of the curve, in order to ensure their offerings are attractive enough to entice new customers.

One of the ways to do this will be to introduce a new form of ADSL, called ADSL 2+, which will be crucial for the delivery of services such as high-definition TV and video-on-demand.

It will allow broadband speeds of up to 24Mbps, although such speed depends on the distance homes are from the telephone exchange.

In reality only around half of those with lines capable of supporting ADSL2+ are likely to get speeds above 15Mbps.

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