Some regions get more LLU broadband than others
Free for all at inner city exchanges does little to spread competitive broadband across the UK.
Research firm Point Topic last week published findings that show the divided nature of unbundled broadband access.
The quarterly growth rate for local loop unbundling (LLU) for June to September was more than 45 percent, but Point Topic said some regions were benefiting much more than others.
Rival broadband providers can use LLU-enabled exchanges to deliver services directly to customers over BT’s telephone wires, rather than lease BT’s wholesale services for the same purpose. This allows them more flexibility in the pricing and features they offer, and potentially promotes greater competition.
Wales and Scotland have the smallest proportion of unbundled exchanges, at around three percent and five percent respectively, while 95 percent of exchanges in London are LLU-enabled.
Analysts say the stark differences result from commercial factors. Demand for broadband access is strongest in the most populous areas such as London, which offer providers the highest potential return on the huge initial investment needed to roll out broadband access.
Point Topic’s Oliver Johnson, who wrote the research, said, “The problem is that everyone is chasing the same exchanges. The ISPs only want to unbundle exchanges where they’re reasonably confident they’ll make money, but it’s unlikely to include many of the more remote or less densely populated areas for some time to come.”
Carphone Warehouse, which recently added AOL UK’s customers to its user base, is the UK’s third biggest residential broadband provider, with BT in second place behind fibre-based NTL/Telewest.
BT is restricted by Ofcom from dropping its pricing until there are 1.5 million unbundled customers or until April 2007, whichever comes first. When BT can finally set its own pricing, profit margins could come under even more pressure, forcing consolidation.
Comms strategist Steve Kennedy said, “The players likely to [survive] are BT, NTL/Telewest, Carphone Warehouse, Cable & Wireless, Thus, BSkyB and the mobile networks. Unfortunately everyone else will fall to the wayside.”