Only one-fifth of BT exchanges to meet Oftel's access deadline

The telecoms regulator Oftel said yesterday that the Government's aim for widespread unbundling of British Telecom's local loop network to competitors would mean that fewer than one local exchange in five will be accessible by next July.

The telecoms regulator Oftel said yesterday that the Government's aim for widespread unbundling of British Telecom's local loop network to competitors would mean that fewer than one local exchange in five will be accessible by next July.

An Oftel source said that the number of BT local exchanges expected to be open to competitors would number "in the hundreds rather than in the thousands". BT has about 6,500 local exchanges. "Clearly millions of consumers won't get unbundled loops in the first quarter of next year," said the source. "We've never said unbundling would be ready by Christmas. We've said the process would be completed."

That means relatively few consumers and small businesses will have access to competitive high-speed internet services before the summer. The first round of 361 exchanges is likely to open by April with several hundred other exchanges expected to follow by June.

Analysts and telecoms executives questioned the commercial viability of local loop unbundling, especially for large telecoms companies aiming to develop economies of scale, initially in regions and then on a national basis. An added problem is that the small size of many local exchanges will make it difficult for rivals, limited to a portion of a particular market area, to compete with BT, which is already rolling out Digital Subscriber Line (DSL) services.

Graham Cove, chief executive of Redstone Telecom, an alternative network supplier, said: "If you are targeting the consumer market you need more space in the local exchanges. But if you can't get into all of the exchanges in a particular area it will be very difficult to develop a viable business plan. This is why so many of the bigger telecoms companies are up in arms."

Oftel's admission came as it issued proposals to allocate local exchange access. Under the plan operators will bid for space in exchanges, which will be awarded according to operators' expressed priorities covering up to 1,500 bids.

When an expressed priority can't be accommodated, the portion that remains will be added to the operator's next ranked local exchange. This is similar to the single transferable vote system used in European elections. Oftel has proposed that the Electoral Reform Society administer the allocation.

Oftel believes the proposal will help to prioritise the order in which BT will make exchanges ready for competitive access. The regulator also wants to establish the means to allocate space for DSL equipment in certain high demand exchanges.

Analysts believe the plan, which Oftel will hear comments on until 8 November, may retard the deployment of competitive consumer services. Since access to business users will require less space in BT exchanges, operators are likely to prioritise their requests to tap that market, leaving consumers with little choice other than BT's own Openworld at £40 per month.