Backgrounder on Local Loop Unbundling in the UK Pt 2

With all of these moves towards digital delivery in entertainment, we thought it would be worthwhile understanding one of the key items in this process – how to get the digital content to UK households.

Steve Kennedy is an acknowledged expert in the telecoms and data networks field, so it was an obvious choice for us to ask him to write an overview of how other IP operators can compete with BT – by creating their own data network. To do this, they need to put their own equipment into the telephone exchanges that connect to peoples houses. That process is Local Loop Unbundling (LLU).

Over three days we’ll give you a full background in LLU in the UK.

Yesterdays piece gave an overview of LLU and which companies are players in the UK.

LLU Penetration
All the large operators are going into around 1,000 DLEs (those being the most densely populated), since there are only around 1,200 of them, all the operators are targeting the same DLEs and there’s a lot of overlap.

Backgrounder on Local Loop Unbundling in the UK Pt 2Since the operators all want to get into the same exchanges, there’s overcrowding and BT have to install new hostel space (the space where operators can put their own equipment into) which causes delays. It can take more than 6 months from when an operator puts an order in to being granted access to an exchange.

LLU (un)Economics
When LLU was announced it was prohibitively expensive, mainly due to Ofcom (or Oftel as it was then) allowing BT to set the pricing models.

Over time the economics have become fairer to operators, with BT being forced to set-up BT Openreach which looks after the physical infrastructure. If they hadn’t formed Openreach, it’s likely Ofcom would have pushed for a split of BT.

Ofcom then made BT not reduce wholesale pricing for their broadband services to give LLU operators a chance to gain a foothold. BT would have to maintain their pricing until April 2007 or 1.5m unbundled lines, whichever came first.

In Dec 2006 there were 1,000,000 unbundled lines and last week Ofcom announced that 1,700,000 unbundled lines had been reached (there was no distinction between Option 2 and 4). BT Wholesale has over 9m broadband customers.

Also Carphone Warehouse (CPW) released their interim results showing they had 2.31m broadband customers, 700,000 utilising LLU.

So out of the 1.7m unbundled lines, CPW have .7m which means there’s 1m split between the rest (mainly the big players, Wanadoo, C&W, Easynet Pipex and Tiscali).

As a rough model that’s 1.7m lines, spread over 1,000 DLEs which makes 1,700 lines unbundled per DLE. There’s 6 big players which means around 280 customers per operator per exchange.

Backgrounder on Local Loop Unbundling in the UK Pt 2Unfortunately the economics of LLU only work if there’s a lot of customers per exchange i.e. massive scale.

Now that the milestone of 1.5m unbundled lines has been reached, BT Wholesale will be allowed to reduce their pricing (which they’ve said they want to do) which will make the economics even worse.

To get the scale, further consolidation will occur which means fewer LLU operators in the future (Pipex has already put itself up for sale with CPW rumoured to be the front-runner for buying them). They need to do this in order to get the customer penetration per exchange.

The next and final section will cover the possibility of competition to BT and what could happen in the future

Images are courtesy of wb-internet and the BBC, respectively.

Backgrounder on Local Loop Unbundling in the UK

With all of these moves towards digital delivery in entertainment, we thought it would be worthwhile understanding one of the key items in this process – how to get the digital content to UK households.

Steve Kennedy is an acknowledged expert in the telecoms and data networks field, so it was an obvious choice for us to ask him to write an overview of how other IP operators can compete with BT – by creating their own data network. To do this, they need to put their own equipment into the telephone exchanges that connect to peoples houses. That process is Local Loop Unbundling (LLU).

Over the next three days we’ll give you a full background in LLU in the UK.

Backgrounder on Local Loop Unbundling in the UKWhat is Local Loop Unbundling (LLU)?
LLU is the ability to put equipment into BT exchanges (know as DLEs – Digital Local Exchange) and take over the copper line into the premises.

There are two forms known as Option 2 (metallic path facility as BT call it) and Option 4 (shared metallic path facility).

Option 4 characteristics: –

  • Operator takes over the line and only offers broadband services (of course they can offer services on top of the basic connectivity).
  • BT retain control of voice services.
  • BT send out the “Blue Bill”, this includes line rental and voice traffic which means they can still market their services to the customer.

Option 2 characteristics: –

  • Operators takes over the line completely.
  • No BT blue bill.

Once the operator has put the equipment into the DLE, then they have to connect it back to their own network. BT can provide this using BES (Backhaul Extension Services) or the operator can use their own connectivity solution. Most operators don’t have the coverage to provide their own connectivity solutions.

BT have around 5,600 DLEs across the UK (i.e. telephone exchanges) and these have customers connected to them. Around 1,200 are in densely populated areas, another 800 or so with medium populations and the rest in rural areas.

Backgrounder on Local Loop Unbundling in the UKAny operator wanting to offer broadband (and possibly voice) has to put their equipment in these DLEs. However there is a cost to unbundling an exchange (around 100,000 including backhaul) which means operators are only targeting the most densely populated ones.

LLU Operators
Operators who have unbundled exchanges are: –

Any operator with a “-” after has been acquired by another player.

* AOL (UK) Ltd – CPW
* Be Unlimited – O2
* Bulldog Communications Ltd – Users to Pipex, LLU C&W
* Cable and Wireless Ltd
* Computacenter PLC
* Easynet – Sky
* Eaton Power Solutions
* eXstream Networks Ltd
* Groestar Ltd
* Kingston Communications (Hull) Plc
* Lancaster University
* Leanwood Communications Limited
* Lumison
* Nestor Electronics Ltd
* Opal Telecom (CPW)
* Pipemedia Ltd
* Pipex Internet Ltd – who knows, up for sale
* Tiscali
* T-Mobile
* Unisys Ltd
* Updata Infrastructure UK Ltd
* Videonetworks Ltd – Tiscali
* Wanadoo
* WB-Internet Ltd
* Zen Internet Limited

Some of the smaller players are conducting trials and some are just offering private services (like Updata who offer connectivity solutions to councils etc).

Tomorrow, the penetration of LLU in the UK and the economics of it.

Orange And Vodafone Propose Sharing 3G Aerials In UK

There’s a lot of radical thinking going on in the mobile business these days and here’s the latest. Vodafone and Orange have signed a non-binding agreement to let each other to use the others 3G infrastructure.

Orange and Vodafone Propose Sharing 3G Networks in UKIt’s all about their RANs – Radio Access Networks, which connect customers mobiles to the operators networks.

Until now they’ve gone around installing their own, but are now realising that this is a mighty expensive business, seeing as the cost is several £100k per base station. In rural areas these may only service a handful of people, thus rending their investment uneconomic.

The core of the proposal is to

  • Continue managing their own traffic independently
  • Retain full responsibility for the quality of service they offer their respective customers
  • Remain competitors in the UK mobile wholesale and retail markets

The summary – share infrastructure, but compete on service.

What’s forcing this?
When the mobile companies bid for the 3G licenses, not only did they pay over a huge amount of money, but they also took on obligations to provider 3G services to a certain percentage of the UK population.

As not many people have signed up for 3G, the mobile companies haven’t wanted to spend the money on servicing a population that isn’t giving them money with subscriptions and they’ve let their obligations slip. Until now Ofcom hasn’t been pursing them on this.

Three, the largest 3G provider in the UK, has recently been saddled with three little letters by Ofcom – SMP – Significant Market Power. They’re not too happy with the restrictions that this imposes on them, so have been pointing out to Ofcom that the other 3G license holders aren’t fulfilling their coverage obligations.

To ensure that they don’t get saddled with substantial fines by Ofcom, the other 3G holders will need to expand their infrastructure. By sharing costs on this, they save money.

More details of this will be provided by Steve Kennedy, an expert in this area, in an article later today tomorrow.

1 In 3 Euro Homes To Have AV/IT Network By 2010

1 In 3 Euro Homes To Have AV/IT Network By 2010More than 1 in 3 European households will have an integrated home network by 2010, according to a new industry report from Understanding & Solutions.

Until recently, home networking – the ability to connect digital devices together around the home – has largely been confined to Broadband and PC networking. However, linking multiple computers, telephones, televisions, Personal Video Recorders (PVRs), games consoles, home security systems and other digital devices into a home network is slowly beginning to generate a groundswell of activity.

Understanding & Solutions predicts that within 2-3 years IP crossover networking (bridging the gap between PC/Broadband and AV/Broadcast) will gradually increase as a result of consumer demand, coupled with a growing online content supply from the entertainment, photo services and consumer electronics industries.

“We’re all becoming more demanding, craving access to up-to-the-minute entertainment and information – however, wherever and whenever we want it,” says John Bird, Principal Analyst at Understanding & Solutions. “Home networking is the new gateway that manages, transports and stores our information across multiple devices within the home: it’s the great content enabler and by 2010 at least 30-50% of all consumer electronics devices on sale will be network-enabled.”

There are two key factors driving the home networking revolution, each with its own respective service provider ‘push’: namely, the wide availability of Broadband and the increase of digital multi-room TV networking.

1 In 3 Euro Homes To Have AV/IT Network By 2010

Consumers want to access Web content on a range of devices, including PCs, laptops (accounting for over 50% of the consumer PC market), games consoles and handheld devices. Additionally, PCs are increasingly being used to store entertainment content, which consumers now want to access and view on other consumer electronics products around the home, including TVs, PVRs and home audio equipment.

In parallel with this Broadband-driven trend, multi-room TV networking will move from analogue to the digital domain over the next 3 years, using Wi-Fi and a variety of ‘no new wires’ technologies. For example, coax, powerline and phone line communication signals can now carry a digital network signal around the home: simply plug in and you are connected.

A significant cultural change over recent years is that many consumers are using the PC as a mainstream TV viewing platform. Indeed, a quarter of European homes now have PCs and TVs co-located in the living room.

“Another key factor,” says Bird, “is the MP3 boom. With more than 200 million player owners worldwide, consumer focus is moving towards the PC as a music access device, storage platform and media library. This is resulting in a small, but growing number of users networking PC-based content and direct Broadband connectivity across to other audio devices such as home music systems.”

Networking of AV/Broadcast-centric and PC/Broadband-centric ‘clusters’ will not happen overnight, but the ingredients for market growth are there. As Broadband architectures and mass storage evolve towards fully-networked distribution systems, a new breed of consumer is demanding its own home entertainment and communications hub in a rapidly converging marketplace.

Understanding & Solutions

Net Neutrality Matters

Net Neutrality MattersImagine a world where Internet performance is controlled by the company who owns the cables and where speed is sold to the highest bidder. Imagine a world where some Web sites load faster than others, where some sites aren’t even visible and where search engines pay a tax to make sure their services perform at an acceptable speed. That’s the world US Telecommunications companies (telcos) such as AT&T, Verizon, Comcast and Time Warner are trying to create.

The debate centres around the ongoing review of the US Telecommunications Act and the concept of network neutrality (net-neutrality). The telcos have been lobbying congress to allow them to introduce priority services ensuring that the fastest data transfers and best download speeds are sold at a premium rate. The telcos position is widely seen to be in conflict with the most fundamental assumptions about what the Internet actually is.

To the lay person, it may seem like a laughable proposition. As Cory Doctorow (FreePress) put it, “It’s a dumb idea to put the plumbers who laid a pipe in charge of who gets to use it.” And yet the US congress is swaying towards the view of the telcos, so what’s going on?

The debate was kick-started in November 2005 when AT&T CEO, Ed Whitacre commented, “Now what they would like to do is use my pipes free, but I ain’t going to let them do that because we have spent this capital and we have to have a return on it. So there’s going to have to be some mechanism for these people who use these pipes to pay for the portion they’re using. Why should they be allowed to use my pipes?”

Whitacre’s argument boils down to the assumption that services such as Google and Yahoo are somehow freeloading on the infrastructure owned by the telcos. Cory Doctorow points out a fundamental flaw in his reasoning, “Internet companies already are paying for bandwidth from their providers, often the same companies that want to charge them yet again under their new proposals.”

Net Neutrality MattersAs Doctorow and other commentators have observed, Internet users and businesses already pay proportionally for their use of the net, allowing the owners of the infrastructure to take a further cut distorts the market in favour of those with the deepest pockets and threatens innovation and the development of new services.

Tim Berners-Lee, inventor of the World Wide Web, weighed in to the argument saying “Net neutrality is this: If I pay to connect to the Net with a certain quality of service, and you pay to connect with that or greater quality of service, then we can communicate at that level. That’s all. Its up to the ISPs to make sure they interoperate so that that happens.”

The debate in the US is split largely along partisan lines with Republicans favouring the telcos and Democrats siding with the pro-neutrality lobby. Since Whitacre started the debate, the telcos have promoted their case heavily using extensive television advertising and lobby groups. The pro-neutrality group (comprising the bulk of the industry) has organised itself with activist Websites such as save the internet and has signed up over a million individuals to its petition, but the campaign is not going well. On May 8th the House of Representatives passed the “Communications Opportunity, Promotion and Enhancement Act of 2006,” or COPE Act while defeating an amendment (the so-called Internet Platform for Innovation Act of 2006) that would have provided protection for neutrality. The next opportunity for progress comes this week when the Senate votes on Internet Freedom Preservation Act of 2006 which also carries a neutrality friendly amendment.

Today, the legal Website Outlaw reported that two US Attorney Generals (Eliot Spitzer and Bill Lockyer) have backed the pro-neutrality cause. Spitzer wrote a letter stating that “Congress must not permit the ongoing consolidation of the telecommunications industry to work radical and perhaps irrevocable change in the free and neutral nature of the Internet”.

Whatever Spitzer and Lockyer’s influence, many commentators believe this kind of corporate influence on communications can only lead to economic censorship. As law professor and copyright activist Lawrence Lessig said in 2004 “The Internet was designed to allow competition and let the best products and content rise to the top. Without a policy of network neutrality, some of those products could be blocked by broadband providers”.

Speedy Macs; iMac G5; End Of Internet – Teenage Tech News Review

Quad processor powermacDid someone say fast?
This week’s update is an Apple-feast… Apple sent out a media invitation a few days ago, titled “One More Thing…”. This phrase has often been used in the past by Steve Jobs to introduce new hardware. So I sat and waited with bated breath, or, well, I was excited anyway.

Sadly, the 4-processor Powermac that I had spotted on French site,, didn’t materialise, but I didn’t really expect it to until late next year. The specs on the Powermac I spotted there did never the less impress me a lot: Overall, more than 11Ghz of processing power in one box. Would probably also heat most of the house, but that’s beside the point.

I’d love one of these, as it would surely mean the little waits I have now opening Photoshop and other professional applications would finally vanish and it would simply cool. I do however doubt I will EVER be able to afford one.

iMac G5 iSightCouch Potatoes Rejoice
Some of the hardware that was actually released includes the new iMac G5. The difference this has from earlier models? It is equipped with a built-in iSight, basically a webcam. I have played around with an iSight before, and the performance and image-quality is far above what I have experienced with other web cams.

The other difference between this model and the last is that this includes a handy technology called Frontrow which is basically a remote control. This places the new iMac as a serious competitor to Windows Media Centre, something that our friends at Microsoft will be worried.

In my opinion, any industry that has more than one competitor in it will always have more innovation than a monopoly, because companies are actually forced to compete. I hope that this will bring some exciting new ideas into the fairly stagnant home entertainment computer market.

Data HighwayInternet? Break? Yeah right…
Yes, it’s that time of the week again: The usual doomsday announcements this week included an announcement from the EU that the Internet could fall apart next month. If this is serious, I am going to have to find some other way of life…

The trouble nowadays is, that there’s so many people saying the world’s going to end and that civilisation will collapse, when it never does, that no-one takes anything that will change their entire lives seriously, and until something life-changing actually happens, nobody will.

HomePlug AV Now Official

HomePlug AV Now OfficialThe long-anticipated launch of HomePlug AV specification has finally reached its public release on Thursday last week.

HomePlug, or the HomePlug Powerline Alliance to give it its full grand title, is a trade and standards body representing over 50 companies that promote the use of the internal power wiring of a house as a means of providing cheap and quick networking.

The theory behind HomePlug is that you simply buy HomePlug compliant equipment, plug it in to a main socket in your house and you have a home network. A boon you would imagine where the property is a few years old and wasn’t wired for networks when built.

In practice there have been some problems with it, the most glaring being that if a vacuum cleaner is plugged into the house’s mains and used, its interference reduces the data flow to a trickle. At this time, we are not aware if this has been addresses in the AV standard.

HomePlug AV Now OfficialThe body started in Q1 2000 and knocked out its first specification, HomePlug 1.0 in spring 2001. 1.0 was intended for relatively low bandwidth applications, as it ran at 14 Mbps.

In October 2002, they started discussing the idea of HomePlug AV, a much higher bandwidth version that would enable the passing of digitised video around the house – not only Standard Def (SD) TV, but High Def (HD) too.

Needing to run video, never mind HD video, required lots more bandwidth, so the theoretical speed to HomePlug AV is 200Mbps, with the 100Mbps (again theoretical) being available for use. The AV release also has good things like Quality of Service (QoS), useful when delivery video and voice around the network, as well as strong security, 128-bit AES vs 56-bit DES of version 1.0.

HomePlug AV Now OfficialThey intend the chips and products which are HomePlug Av compliant to be hitting the market in 3-6 months. We find this pretty surprising given how long the idea has been in gestation, and how many of these standards bodies have pretty open secrets as to which spec they’re going to be running with, well in advance its the public release.

HomePlug Powerline Alliance

UK LLU – OTA Say, “Could do Better”

OTA: Local Loop Unbundling Lagging BehindThe Independent Office of the Telecoms Adjudicator (OTA) has issued an update on their progress of ‘local loop unbundling’ (LLU – the process of opening BT’s exchanges to competitors).

The speed of unbundling, or in this case lack of it has a direct effect on the range of competitive broadband providers, and therefore the speed of services that can be provided and their cost.

To date, some 31,000 lines have been unbundled, but the OTA update reads: “Good. But could do better.”

There are reports of variable performance in some operational areas, with performance lagging behind the OTA Key Performance Indicator, ‘Right First Time’. This snappily monikered indicator checks to see if services are being delivered in time to meet customers’ expectations.

The OTA has set a target of 75% with actual delivery being variable at 50-60%. This target rises to 85% in the near future.

The number of lines unbundled has grown from 12,000 in May 2004 to 31,000 lines unbundled by 31 January 2005.

Once again, this falls behind the OTA target, which had specified 50,000 unbundled lines by February 2005.

The Telecoms Adjudicator Scheme is successfully underway, with 14 companies signed up, and encouraging noises about investment commitment, have been heard.

LLU price reductions were implemented from 1 January 2005, and there are more price reductions on the horizon.

Despite all this, LLU operators continue to experience operational problems and variable delivery performance isn’t doing wonders for the operators’ marketing plans.

The Adjudicator’s update tells it like it is: as the orders keep rolling in, operational performance is the key to success for LLU.

Independent Office of the Telecoms Adjudicator
Ofcomwatch comments on it.

BT Drops the Cost of Local Loop Unbundling

For a very long time UK broadband providers have claimed that BT have had an obvious lack of enthusiasm for letting them in to telephone exchanges to install their own equipment, to offer services to rival BT’s. Known in the trade as local loop unbundling (LLU), BT’s rivals see it as the only profitable way to provide broadband and high-speed services, so they don’t have to pay BT for each customer, as they do if BT equipment is used.

Following on from continuous pressure from Ofcom, the UK super-regulator, and LLU price reductions announced in May, BT has now cut the cost further.. . They put this down to   their investment in new automated processes. From now the cost of a shared LLU line is 62% less than it was in June of this year, the connection charge is now standing at £37 (~$64, ~€52) while the annual rental is £27.12 (~$48, ~€36).  It looks like BT might be on a roll and if it continues, prices may be reduced by up to 70% by the end of the year.

Ofcom already indicated its enthusiasm for LLU to play a greater role in stimulating competition in the wholesale broadband sector. Last April its chief executive, Stephen Carter, hinted that Ofcom would be proactive in making LLU more attractive to rival operators.

In real terms, cutting the cost of LLU will encourage the deployment of more 3rd party equipment in BT’s exchanges, giving more choice to UK customers.  As if to prove how serious they are about it, BT is appointing an LLU director of ceremonies.  NTL and Cable & Wireless (Bulldog) have already announced multi-million-pound plans to invest in LLU in the UK, and they must be chomping at the bit to install their kit in BT exchanges and get on with the business of offering a service to their customers.

The UK is now a respectable 8th in the list of DSL countries, according to the DSL Forum. And as a member of the European Union, it is in the number one DSL region with more than 23 million subscribers.  With lower prices bringing the UK more in line with its European counterparts, and higher speeds, customers should notice improvements as the LLU market in the UK is finally ignited.

DSL Forum


BT Broadband Delivered TV – This Month it’s on

The rumours of UK incumbent teleco BT considering a broadband-delivered video service have been circulating again.

It is often said that you can tell if it is an odd or even numbered month by seeing if BT is saying it is launching a broadband service or not.

The latest rumours are that BT would work with Sky. BT has been getting cosy with Sky over many years. It started when Sky wanted to ensure a return path from their Set Top Boxes (STB’s) and had BT install a phone line specifically for this purpose each time a new Sky customer signed up. This relationship continued to grew to include BT offering their customers pricing bundles.

It has been known for some time that BT has been in discussions with makers of Freeview boxes. They are exploring the idea of combining this with downloaded content, distributed to the consumer via broadband.

ZDNet UK reports a currently running 100-household trial with London-based BT employees. They proffer the commercial rollout could be achieved as early as Summer 2005.

There are two broadband-TV services in the UK; HomeChoice, with operates in London; and KIT running in Kingston-upon-Hull. Both have been delivering service for many years over their own networks.

There is a fly in ointment. One of the major problems with delivering broadcast-quality video to households was introduced by BT when, while trumpeting their price reductions, they set limits on the amount of data that could be downloaded in a month. With video being the most data hungry application, this could preclude the delivery of video to the home without an additional charge being incurred. Unless of course BT lift those limits for their own video service …