Select Committee on Trade and Industry Appendices to the Minutes of Evidence



APPENDIX 15

Memorandum submitted by Colt Telecommunications

1.  INTRODUCTION

  This memorandum addresses the following topics:

    —  Local loop unbundling;

    —  Leased lines; and

    —  Virtual mobile networks.

2.  LOCAL LOOP UNBUNDLING

  We set out below a summary of some of the key events in the UK unbundling process:

    —  On 11 November 1999, Oftel announced that BT should unbundle its local loop by July 2001. Oftel did not specify the process, products, prices or timeline in any detail and suggested these be resolved by "commercial negotiation" between the operators.

    —  From January 2000 the industry started negotiations in the "Access to Bandwidth Option 2: Operator Policy Focus Group" (A2B2 OPF). This had sub-groups looking at products, processes, commercial issues, contracts, trials and technical issues. Colt participated in all groups (chairing the contracts group) with other operators and BT. Oftel was not actively involved at this stage.

    —  The industry discussions resulted in the production of a set of product descriptions and a process manual. Each of these is still being discussed between BT and the operators.

    —  On 26 July 2000 BT launched its ADSL service ("Openworld"), with DSL equipment in 516 exchanges.

    —  First orders for co-location space were scheduled to be placed on 1 September, however this deadline was not met due to industry and BT disagreement over the process (colloquially known as the "bow-wave process") to be used to:

      —  prioritise which exchanges should be built first (as BT had inadequate resources committed to satisfactorily deal with aggregate industry demand); and

      —  determine how space should be allocated in the event that more space was demanded than was available.

    —  As the industry was unable to agree the bow-wave process:

      —  Oftel decided that BT should start surveying 361 "non-contentious" sites, which means that BT is currently surveying 361 least popular sites which do not serve large numbers of consumers (for example none of the 361 sites are in Colt's top 700 on Colt's list of high priority sites);

      —  Often consulted on a determination which would define the bow-wave process going forward; and

      —  Oftel will be finally settling the process in mid-November, and the process should begin for sites needed for commercial roll-out on 1 December 2000.

    —  There is no certainty over the timescales for BT to prepare and hand-over co-location space to operators:

      —  BT has contractually committed to deliver sites within nine months of the start of the process (three months for surveys and six months for build), which would mean that the first commercially important exchanges will be delivered in August 2001.

      —  Oftel's view is that the process should take four months (rather than the nine in the contract) for BT to deliver sites, which would mean that BT would start to deliver commercial sites in March 2001. We understand that BT disagrees with Oftel.

    —  BT has committed only limited resource to delivering sites. BT have not committed to a delivery rate. We have asked for more information on their resources, but it has not been made available.

    —  A complaint was made to Oftel on 28 September that BT had discriminated against other operators, and asked Oftel to urgently intervene under the Telecommunications Act and/or Competition Act on an interim basis to prevent further harm:

      —  BT has failed to provide operators with the same facilities as those for its own downstream business (Openworld/Ignite) in terms of information, physical co-location facilities and access to copper loops;

      —  BT has not participated in the bow-wave process;

      —  a number of black-listed sites have BT's own DSL equipment installed;

      —  limited information about exchanges is made available; and

      —  initial surveys for co-location sites have been conducted on a different basis to those undertaken for BT's own business.

    —  The industry was unable to agree a satisfactory contract. A detailed complaint was made to Oftel on 28 September. Key points made in the complaint concerned:

      —  co-location: arrangements are discriminatory, unverifiable, non-binding and therefore unfair;

      —  BT's service contract with individual operators: there are no firm contractual obligations to provide the services required of BT; unreasonable penalties are imposed by BT; BT reserves unreasonable rights of interference with operators; equipment;

      —  unreasonable restrictions are imposed on operators' ability to connect to third party equipment, on sub-letting and assignment; and BT reserves unreasonable rights of termination;

      —  withholding of information: operators have been refused any information as to the resources being fielded by BT to support its own DSL business as compared to those proposed to be made available to service competing operators; and

      —  quality of offering.

    —  Oftel is currently considering both complaints.

    —  Oftel is now chairing the A2B2 OPF group.

  In Colt's view the current problems with the process (which are the subject of the complaints being considered by Oftel) may seriously impact broadband Britain in that consumers and businesses are being denied services and the UK is being left behind its major competitors such as the US and Germany.

3.  LEASED LINES

  Colt fully supports Oftel's recent proposals to control the prices for local ends of leased lines. There is little competition outside urban areas for the provision of "local tails" and as a result the charges currently paid by customers are too high.

4.  MOBILE VIRTUAL NETWORKS

  Colt was disappointed that Oftel has concluded that there is currently no reason to intervene in the mobile market to enable non-mobile operators to launch further network services as virtual network operators.

  In our view such proposals would lead to greater choice and innovation for customers. We will continue to participate in ongoing reviews of the situation.

5.  ABOUT COLT TELECOMMUNICATIONS

  Colt Telecommunications in the UK is a wholly owned subsidiary of Colt Telecom Group. As of 30 June 2000 Colt's Synchronous Digital Hierarchy fibre optic network in London consisted of 270 kilometres covering the major business concentrations in the City of London, the West End, the Docklands, Westminster and stretching out to Hammersmith, Camden and Park Royal. Colt is currently building an inter-city network between London, Birmingham, Leeds, Manchester, Bristol and other UK cities. As of 30 June 2000 Colt's network provided switched and non-switched services in 1,433 buildings.

6.  ABOUT COLT TELECOM GROUP

  Colt Telecom Group plc is a leading provider of high bandwidth data, Internet and voice services to business and governmental customers in Europe. It currently has operations in 25 European cities in 10 countries and plans to be providing service in 30-32 cities by the end of 2001. Colt also has 10 Internet Solutions Centres in service with plans to develop between 20 and 24 in total. During the year ended December 1999 Colt's turnover was £401.6 million and it carried 7.8 billion switched minutes of traffic. At 30 June 2000 Colt had installed 2,369 route kilometres of fibre-optic cables in its city-networks; provided 5.3 million private wire voice grade equivalents and had 4,754 buildings connected to its networks. Colt Telecom Group plc is listed on the London Stock Exchange (CTM.L) and Nasdaq (Colt).

3 November 2000


 
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