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Local Loop Unbundling
By jpenston | October 10, 2006 |
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So here we are, just over half way to the 1.5 million lines target. It is worth stopping for a second to consider what we have learned about Local Loop Unbundling.
Firstly, we have learned that you need customer density on an exchange by exchange basis. If you have over 350 subscribers on each exchange, your network costs will be lower with LLU than they would be with IP Stream. This means that only two types of provider will survive: the largest national players and the most concentrated geographical niches. If you are doing LLU and you don’t have 1 million subscribers, you need to pick and choose your target cities and towns carefully to minimise overlap with your competitors. It is perfectly possible to get 30%+ local market share by targeting your customers well.
Secondly, that every ISP wants to build to (almost) the same exchanges. Telcos have historically forgotten the value of unique assets. LLU again shows operators all opting to invest where the markets are theoretically the biggest and not where unique positions can be carved out.
Thirdly, migration is a serious problem and has in many cases led to customer downtime. Some elements of migration are out of the control of the ISP, but some of the early migration issues showed a lack of contingency planning. The point is to not just to assume that you can get your customers onto your LLU network by building the network and to make detailed plans for how to handle problems that cause outages in migration.
Fourth, that commercial bundling necessities have driven the need to take on Line Rental and Voice (in addition to Broadband) on Full Metallic Path services. This seriously complicates the customer support responsibility and the skills issues should not be ignored.
Fifth, the requirement to build your own TAMs by exchange to test individual lines is a major system and infrastructure development and integration project. Reselling IP Stream never needed this and ISPs could always then blame BT for any fault when talking to the customer. They can no longer pass the buck, can ISPs stand on their own two feet?
Sixth, that BTs systems are not ready for this and neither are the ISPs. In the rush to market, some serious shortcuts have been taken and these problems are now acute and made worse by 850,000 customers expecting service.
And seventh, that Cable is actually already in place and leads the UK broadband market in spite of having only 50% coverage. Taking on an entrenched cable network with a service that is structurally vulnerable is a risky option.
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