German, UK operators in bid to force DSL unbundling progress

German, UK operators in bid to force DSL unbundling progress – Company Business and Marketing

Michelle Donegan

Competitive operators in Germany and the United Kingdom are bringing indirect legal actions against Deutsche Telekom and BT for delaying network unbundling.

But new entrants are fighting shy of using a new unbundling order from the European Commission to member states which comes into effect 1 January 2001, even though it would give operators the right to sue incumbents directly, for the first time.

Despite complaining for years that they had no legal recourse against incumbents blocking network access, new entrants won’t be taking immediate actions themselves in the New Year.

Instead, other licensed operators in the U.K. have asked the Office of Telecommunications in effect to stop BT rolling out its own digital subscriber line services, and to require BT to join in the bidding process for local exchange space which competitors have been forced to undergo to get colocation of their DSL multiplexers.

And in Germany, Colt Telecommunications Group plc, which is building metropolitan business networks throughout Europe, has filed the first legal complaint on unbundling against Deutsche Telekom with the Regulierungsbehorde (RegTP). the national regulatory authority in Bonn.

Colt Telecom has asked for penalties to be imposed on Deutsche Telekom every time it delays colocation and unbundling requests.

“Telekom has not been keeping its promises to us but because there has not been a penalty Telekom has been able to get away doing things as it pleases,” said Horst Enzelmuller, managing director of Colt Telecom GmbH in Frankfurt. Enzelmuller said Telekom has “been playing silly games and offering lame excuses” for delays and not meeting agreed to deadlines. “They’ll tell us that it’s seven weeks till the multiplexer can be installed and then a week before they tell us it’s not possible,” he said.

In the U.K., about 15 operators have filed a joint complaint with national regulator Oftel, charging BT with discriminatory behavior in allocating colocation space in local exchanges. They claim that BT gets whatever local exchange space it needs because it does not have to bid for space like all the other competitors.

The new entrants are demanding that Oftel order BT to stop installing its own DSL equipment until the situation is resolved, However, it is believed that Oftel has in fact told BT that it must share its own space allocations with competitors, but Oftel has not publicly disclosed this.

Discrimination

“There’s going to be a lot of argybargy on this,” said Macv Sullivan, an independent telecommunications consultant in London. “BT should give all wholesale DSL equipment the same treatment as it gives to its own DSL equipment.”

Oftel is investigating the complaint and has to first find that BT has committed undue discrimination before stopping BT’s rollout of DSL equipment.

In Germany, according to the conditions set down by the RegTP in June. Telekom must provision colocation space in its local exchanges within 10 weeks if space is available. Before this ruling the provisioning process took up to, and sometimes exceeded. 16 weeks.

While the RegTP is already investigating similar complaints from other operators, the case with Colt is the first to ask the RegTP to look over the shoulder of Telekom and exact penalties when the operator fails to comply.

Telekom, however, dismisses the charges pointing to a 600% increase in the orders for colocation space in their local exchanges. “It’s a tall order to fill and it takes time and capacity to respond to this tremendous demand,” a Telekom spokesman said.

Other operators in Germany support Colt’s position, but not all would go so far as to put all the blame on Telekom. “We haven’t had the same problems as Colt. but we have noticed that Telekom has been using stalling tactics,” said Bernd Schlobohm, chief executive of QS Communications AG, a Cologne-based provider of DSL services. “We have complained but would not want to go so far [as Colt] as to sue Telekom,”

In the U.K. operators are threatening to take their complaint to court if Oftel doesn’t react, but legal action seems unlikely.

“All the people threatening to sue BT is just hot air,” said Bob Cushing, group strategy and business development director at Redstone Telecom plc. based in Borehamwood, England.

But some European competitive carriers boldly proclaim they’re prepared for the fight.

The European Parliament last month passed a local loop unbundling regulation in record time, urged on by heads of state.

Assuming the regulation is adopted by the Council of Ministers at the end of this month, then a new entrant will have the power to sue an incumbent which does not comply with the national regulator’s guidelines for unbundling.

“This regulation will make a hell of a difference.” said Josee van den Berg, head of regulatory affairs at Versapoint NV. of Amsterdam. “Now, you need good lawyers and to be creative to squeeze it out of the national act. But this [regulation] settles it. And we can go full speed ahead.”

But many new entrants are reluctant to use the full legal force that the regulation grants them.

The regulation does not mandate unbundling by the end of the year. But regulators must have a framework in place and incumbents must publish their offers for unbundling and colocation from the beginning of next year.

“The ultimate sanction is that if incumbents do not open up their markets, new entrants can take them to court.” said Nicholas Clegg. MEP from the East Midlands in the United Kingdom and rapporteur of the regulation.

But others in the industry are unimpressed, even disappointed about the unbundling regulation.

“[The regulation] is no longer as new entrant friendly as possible.” said Mark Naftel, a Iwayer at Norton Rose, of London. “Now a reference offer will have to be made available at some point at the end of the new year, as opposed to having to provide the loops as of January 1, 2001.”

European DSL market and unbundling

European incumbents’ resistance to unbundiing is damaging broadband access market opportunities for themselves and their new competitors, according to a new report from leading industry consultants. The report casts doubt on the effectiveness of incumbents’ delaying tactics.

The report, from Analysys Limited, of Cambridge, England, says that by hindering unbundling and colocation processes, incumbents are diminishing competitive carriers’ incentives to invest in digital subscriber line (DSL) technology and driving them to consider other access technologies. Analysys concludes that while this may at first appear an attractive outcome for incumbents, foreshortening the opportunities for new OSL service providers will be a net loss for all involved.

“Incumbent operators need to adopt a different attitude,” said Ade Ajibulu, senior consultant at Analysys and joint author of the report, Delivering DSL in Europe, “Their strategy is to slow down [unbundling] as much as possible without drawing too much regulatory attention. This is an incumbent’s natural instinct, but it hurts the whole market.”

Already, Global Crossing, MCIWorldcom and RSLCom have dropped plans to participate in the U.K.’s unbundling process, and KPNQwest is significantly scaling down its DSL deployments in Europe next year from 1,800 central offices to 300.

“[DSL carriers] are scaling back their DSL deployments,” said Ajibulu. “They are used to much speedier responses and processes.

But even with the technology’s associated regulatory wrangles and colocation complexities, DSL along with cable will be the primary Internet access methods for small-to-medium enterprises (SMEs) in 2005, Analysys predicts.

In the meantime, with colocation proving to be more difficult than originally thought, competitive carriers are rethinking their access options. Analysys notes a renewed interest in distant colocation where carriers locate DSL equipment outside local exchanges, such as in street cabinets (see page 27.) Competitive carriers are also reassessing alternative access technologies, such as fixed wireless, cable modems and even fiber to the customers’ premises.

From the incumbents’ point of view, the net effect is a loss of potential wholesale DSL revenues. If incumbents persist in making colocation so arduous for competitors, then they open the way for a wholesale service provider to do it better. “The more difficult the process is, the more room there is for a wholesaler to come in and master the process,” said Ajibulu.

The key to the European DSL market for now, concludes the report, is that it’s vital for incumbents to view unbundling as a partner opportunity rather than as an regulatory imposition.

COPYRIGHT 2000 EMAP Media Ltd.

COPYRIGHT 2000 Gale Group