Delay in unbundling of BT's local loop 'threatens £15bn investment'

Uncertainty about opening British Telecom's local loop network threatens up to £15bn in investment over the next three to five years, telecoms executives warned yesterday.

Uncertainty about opening British Telecom's local loop network threatens up to £15bn in investment over the next three to five years, telecoms executives warned yesterday.

It also emerged that one leading alternative network provider is to seek a meeting with the e-commerce minister, Patricia Hewitt, to urge the Government to break the logjam that has developed over opening up BT's copper wire lines to competition.

Charles McGregor, chief executive of Fibernet Group, said: "If you add up the digital subscriber line investment programmes of UK operators over the next three to five year you would get £10bn-£15bn. If the programme here doesn't work we will just put our investment elsewhere, for example, in Germany and France." He added: "Other companies will do likewise."

Fibernet is one of Britain's leading telecoms start-ups with a market capitalisation of £825m. It provides high-speed digital networks for the interconnection of computers, telephones and video devices.

"Oftel must choose some way of managing the industry," Mr McGregor said. "If those people fail to deliver over a sustained period of time, you call up the boss. We will be meeting with ministers, including Pat Hewitt."

Ms Hewitt defended Britain's approach to unbundling. "Oftel is making tough decisions to drive through local loop unbundling." She added, however, that a new telecoms regulatory framework would be addressed in the upcoming White Paper on digital convergence.

As pressure mounted this week, BT circulated documents showing that wide spread refurbishment work is required at many of its 5,500 local exchanges before access can be given. It is in these facilities that competitors have gained the legal right to install their own network equipment to provide high-speed internet connections.

Some of the alterations BT claims are needed include: 17,000 sq m of anti-static floor covering; 1,700 security doors; and 2,500 smoke detectors.

Chris Godsmark, analyst with Investec Henderson Crosthwaite, noted in a recent research report: "The confusion over unbundling is good news for BT. Failure to sort out the uncertainties will lead to a slower take-up of unbundled services from alternative carriers and hold back broadband Britain."

Mr McGregor praised BT for being a tough competitor, but questioned its commitment to local loop unbundling. "BT say they are committed but the problems keep multiplying."

Other industry players see poor co-ordination among telecoms rivals as being equally responsible for the troubles with unbundling. A consultant in the telecoms sector said: "The operators have not been organised... They should have gone to Oftel much earlier."