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Users voice local loop concerns

Antony Savvas


Users are concerned that BT's corporate re-organisation will create uncertainty over the ownership of the telecoms local loop and confusion over how the telecoms market is regulated, writes Antony Savvas.

BT has so far not explained how its plans to separately spin off its retail and wholesale divisions will affect business and domestic users. It also plans to create separate Internet-based and cellular companies.

Such a move would make it easier for BT to make quicker price cuts, without falling foul of regulator Oftel, which has to consider allegations of cross-subsidisation from BT's rivals. BT has already ruled out bringing in free local calls to create a faster take-up of e-commerce.

BT chief executive Peter Bonfield says, "I don't think we're moving towards free local calls; we're trying to balance our prices so they are fair to all our customers and satisfy the regulator."

Telecommunications Managers Association director general David Harrington comments, "What we don't know from the information available is what sort of restructuring is intended.

"If it is a structural separation of the wholesale and retail businesses, then we might see some real gains. This would replace the largely ineffective accounting separation introduced by Oftel, so that's a positive."

But Harrington adds, "On the other hand, it does nothing for the local loop. It merely helps insulate the infrastructure from the full blast of the Competition Act.

"If the local loop is to be owned by a separate company, then BT Wholesale, for instance, could play the Competition Commission off against Oftel and prolong co-location negotiations between BT and rivals wanting access to the local loop to directly offer their services to users."


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