Europe’s “Last Mile” Impossible To ReachBy Adam Eisner July 23, 2001 — When Local Loop Unbundling (LLU) in Europe got serious last year, most ISPs, second-tier telcos and Web hosting companies hailed it as a crucial step toward opening up the high-speed Internet access marketplace to competition.
One year later, LLU seems to have done little, if anything, to assist those companies in bringing their services to market. In fact, a report released by Forrester Research this week suggests LLU may be “stifling” competition instead of promoting it.
For those who may not be too familiar with the situation, here is a quick primer: Local Loop Unbundling is the process in which a telecom operator (like the UK’s British Telecom, for example) makes its copper cables which run from customer sites to a telephone exchange available to other companies. This allows other companies to upgrade individual lines to DSL-based technology, thereby allowing them to offer services like high-speed Internet access to consumers and businesses.
Prior to introducing the changes, Germany and Denmark were the only EU countries providing open access to local loops. Last year, however, EU telecom ministers agreed to introduce LLU throughout Europe to ensure a “wired” Europe. The introduction of LLU was supposed to bring European Internet users up to par with their North American counterparts, who have had high-speed DSL access readily available for quite some time.
Web hosting companies were delighted with the introduction of LLU because it allowed them to negotiate different connections and SLAs (Service Level Agreements). Meanwhile, ISPs were happy because they could finally offer “always on” high-speed Internet access.
Unfortunately, few companies in Europe have seen the benefits of LLU to date – this despite the fact that most European telcos have since supposedly opened up their local loops.
And to add insult to injury, new research from the Yankee Group indicates that major telcos have been slow to open their loops while at the same time aggressively launching high-speed Internet access campaigns of their own, leaving smaller ISPs, telcos and hosting companies to drown in a sea of red tape.
In a report released this week titled “Europe’s Unbundled Local Loop: Chasing A Rainbow”, senior Yankee Group analyst Jonathan Doran says “LLU does not adequately support alternative operators entering the market for broadband services, because of cumbersome regulatory processes and the entrenched dominance of the incumbents.”
The standoff between incumbents and companies want a piece of the access action has been most prominent in Britain. The Office of Telecommunications (Oftel), a government-appointed agency, and Birtish Telecom have come under heavy fire for not doing enough to open up the access provider market.
A number of industry groups have been sounding warning bells about the situation for the past year, including a Trade and Industry committee set up to investigate local loop unbundling. In a March report to the British government, the committee called BT and Oftel’s efforts to open the “last mile” in to homes and businesses “farcical,” and scoffed at the British government’s aim to be on the same level as Germany and the Netherlands by the end of 2001 (incidentally, Britain plans to be the European nation with the best broadband access by 2005). BT is already six months behind the EU’s target date for LLU, which was January 2001.
According to the Yankee Group, companies looking to enter the ADSL market at this point would be best advised to either wait, or resell the wholesale services of incumbents until the dust settles and the outcome of LLU is clear. “Although the wholesale/resale model provides an interim strategy for gaining market share while LLU finds its feet,” the report states, “its current form ultimately benefits the telcos more than the alternates.”
