Unbundling battles keep customers on hold

Conflicts and legal challenges may keep customers waiting for months before they see any significant Internet or telephony services result from "unbundling the local loop", or opening up local phone lines to competition.

Time has nearly run out on unbundling negotiations, and sources close to the process say that carriers are likely to wait until outstanding issues are resolved before moving ahead with offerings.

Unbundling - giving operators access to Eircom's copper telephone wires that run directly to homes and businesses from local exchanges - is mandated by the European Union to begin from January 1st. However, carriers remain mired in disagreements with Eircom over how the process should proceed and how services should be priced.

Members of the unbundling working parties, comprising representatives from the various carriers, are scheduled to meet today in a last ditch effort at hammering out an agreement, but operators are pessimistic that a solution will be reached.

"The issues are fairly substantial," said an Esat spokesman. They include deciding the types of services Eircom and its competitors may offer, restricting access to certain markets, sharing equipment and racks and sharing space in Eircom's exchanges (collocation).

Since Eircom owns most of the local exchanges and the phone lines going into buildings, the company is legally entitled to payments from other carriers for the use of its network.

If unresolved, the operational issues will be returned to the telecommunications regulator, Ms Etain Doyle, on January 15th, and she will make a determination - a binding decision on how matters will proceed.

Separately, she will also consider Eircom's pricing proposals and will either agree to them or make a determination on revised prices. Eircom will then need to submit a new pricing offer. The Office of the Director of Telecommunications Regulation (ODTR) hopes to finalise prices by the end of February.

The regulator seems likely to set regulations that will push pricing well below Eircom's initial proposals, and to throw out Eircom's proposed restrictions on the type of Internet access technologies competitors can offer on its unbundled lines. Ms Doyle said last month that she believes Eircom's proposed pricing for access to an unbundled line is too high and exceeds that of most international operators.

According to Eircom's draft proposal, its wholesale charges to other carriers for a line would be three times the cost for a line in Britain, and monthly rental charges are also high.

The regulator also said she did not believe Eircom could legally restrict other operators from offering SDSL, or symmetric digital subscriber line, a higher-quality broadband access format aimed at the business market. Eircom's proposal would limit competitors to offering asymmetric DSL, a consumer rather than business offering.

An Eircom spokeswoman said there is a lot of discussion yet to take place. Wholesale prices for ADSL could also be lower, she said, depending on whether ADSL is offered as a separate service to complete unbundled line access.

But a source close to the negotiations notes that unbundling decisions have been challenged and renegotiated piecemeal in other jurisdictions. The source believes operators here will slowly chip away at initial regulations and pricing structures, either by asking the telecommunications regulator to revise those structures or by taking the regulator to court. Either route suggests an acceptable agreement may take considerable time.

In the meantime the source believes operators will hold back from entering the unbundled market. While prices are to be retrospective to the regulator's final determination, few operators will take the risk of going ahead with services, the source said.

However, Eircom has said it will have an ADSL package available in the first half of this year.