Let the games begin

Versus the other major markets in Europe, the UK has so far been distinguished by a laughable level of local loop unbundling (20k, or 0.6% of total DSL connections, at the end of September), though we have speculated that the market would end up looking like France or the Netherlands over the course of the next year. OFCOM has this morning published final determinations on price reductions for local loop unbundling in the UK. The biggest reductions beyond what BT did voluntarily in May are in shared access rental (-42%) and transfer of an existing line to a fully unbundled provider (-60%).

These changes should kickstart more activity, and there is already tangible evidence of a push by the unbundlers (HomeChoice has some outdoor advertising in Southeast London now, and I heard Christmas campaign spots on AM radio in my car last weekend). The key piece to the puzzle - rental for fully unbundled access - is part of a contentious process of valuing BT's copper network, which should not be resolved until spring of next year. However, it is noteworthy that the voluntary reduction made by BT in this area in May was much lower than in other categories, and as a number of competitive business models rely heavily on affordable running costs for unbundling, we expect lobbying around this process to be intense.