A good idea, badly regulated

No-one would disagree that broadband services have the capacity to revolutionise telecommunications services. With the Internet...

No-one would disagree that broadband services have the capacity to revolutionise telecommunications services. With the Internet market so explosive, the potential for carriers offering broadband services, particularly over unbundled loops is truly great.

Despite recent thinking, broadband services are not a new phenomenon. Cable modems (and to a much more limited extent ISDN) also enable broadband services to be provided to business and residential users. Although both "conventional" forms have their own limits, they have been overshadowed by the focus on DSL (digital subscriber line) technology, particularly in the UK telecommunications market with BT's launch of its ADSL (asymmetric digital subscriber line retail products earlier this year.

DSL technology transforms ordinary analogue phone lines (also known as twisted copper pairs) into an IP-based high-speed digital connection which can then be used to transfer data or access the Internet at much higher speeds than would otherwise be available through modems connected to standard telephone lines.

Although there are many different types of DSL technology, the most common at the moment is asymmetric ADSL. With ADSL, data is transmitted faster downstream (ie from the ISP to the customer) than upstream (from the customer to the ISP).

The biggest advantage of DSL is its "always-on" connectivity, ie just like a standard telephone line there is no need to dial up the service. This means that DSL will always be on standby and ready to use, which will save users considerable time and frustration. Another advantage is that because DSL is deployed on individual dedicated lines, transmission speeds for transferring data or accessing the Internet should not be affected by how many other users are also online.

Although the advantages of DSL are obvious and the mechanics of its deployment not unduly complex, its roll-out in the industry has taken longer than expected.

Although there are physical difficulties - DSL cannot be offered where there is no copper pair and as the high costs associated with laying new copper are unlikely to be recouped through revenue, few operators would consider this an option - the main factor holding the industry back is the lack of a satisfactory regulatory and legal regime surrounding the product itself.

This uncertainty arises largely through BT's wholesale products, on the back of which service providers would have to launch their own brand of DSL products.

As BT's terms and conditions currently stand, such service providers would be launching services which lack robustness and contain no service level commitments. Consequently, if the service is poor, the damage to a service provider's reputation and business will be affected.

Although service providers must ensure they take steps to limit their exposure in their terms and conditions with their DSL customers, they will nevertheless be subject to BT's poorly-defined wholesale offering. Yet by the same token if service providers do not offer DSL or choose to wait until the service is more defined and has been tested by others, they may be viewed as being behind the times and/or simply lacking the technology.

It is therefore a choice between the lesser of two evils. With the UK telecommunications market due to be so fundamentally liberalised in the next 12 months, the goodwill and reputation of any service provider will be as fundamental, if not more so, as the quality and range of services it can offer.

This is clearly a crucial time for any telecommunication provider and the choices it makes.

For further information you can contact DLA's Purvi Parekh on 0207-796 6508 or via email

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