BT gets go-ahead for watered down broadband unbundling

The European Commission on Wednesday said it would accept a proposal from UK regulator Ofcom that BT should be allowed to use a watered-down version of local loop unbundling for its next-generation broadband networks.

The EC said it agreed with Ofcom that BT should only offer a virtual unbundled local access (VULA) product to its competitors.

VULA is an electronic means to provide virtual bitstream-type access that is similar to physical unbundling where ISPs would lay their own cables in the local loop. With VULA, ISPs do not lay their own local loop cables, and they only gain partial control over local exchange equipment.

But the Commission urged Ofcom to enforce full physical unbundling on BT "as soon as it is technically and economically feasible".

Some form of unbundling is necessary to allow competitors to provide services over a monopoly infrastructure like the one BT is building. Other ISPs have been lobbying Ofcom for the best access possible to BT's network.

The European Commission (EC) is arguing that, given the specifics of the UK, VULA was the best way to encourage innovation and choice for consumers.

Neelie Kroes, the digital agenda commissioner for the EC, said in a statement: "In this specific instance, virtual unbundling seems the best option to safeguard competition and enable consumers to benefit from a wider range of services provided over next generation fibre infrastructure."

"However, this interim solution is not a long term alternative to physical fibre unbundling, which should be imposed as soon as possible," she added.

BT said it welcomed the EC's endorsement of VULA, but it did not go as far as praising the Commission's long-term plans.

A statement from BT said: "The Commission will shortly be publishing the details of its reasoning, and it will then be up to Ofcom to respond."

BT announced last month it was to spend a further 1billion to extend its rollout of fibre broadband across the UK. It claimed its new total investment of 2.5billion would give 66 per cent of homes access by 2015 to fibre-to-the-cabinet or fibre-to-the-home networks.