Holiday Plans in Ruins
The European Commission has given its blessing to a proposal from UK regulator Ofcom that BT Group plc (NYSE: BT; London: BTA) can provide virtual, rather than full physical, unbundling of its fiber-to-the-home (FTTH) and fiber-to-the-cabinet (FTTC) infrastructures for up to four years. And that's a blessing that has ramifications for the rest of Europe.
The EC is happy to accept that BT, which has a separate division called Openreach running its access network, can provide a wholesale offering to competitive service providers that allows "product differentiation and innovation similar to that possible through physical local loop unbundling." (See EC Backs Ofcom Virtual Proposal and BT Ramps FTTx Plans, Turns a Profit.)
The EC has made clear, though, that "this should only be a transitional measure."
The EC's Digital Agenda Commissioner, Neelie Kroes, states: "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 [technically and economically] possible."
This is interesting for a couple of reasons. First, that BT can provide such a virtual unbundling product over GPON-based FTTH and VDSL-based FTTC at all. That it can even propose such a solution is in large part due to the technical work undertaken by some of BT's suppliers, including ECI Telecom Ltd. (See ECI Touts Open Access FTTx and BT Ups Its FTTP Target.)
Secondly, this sends a message to the rest of Europe. The EC, in supporting Ofcom's proposal but stating that it wants full physical unbundling down the line (so to speak), is basically sending a signal to markets like Germany, where Deutsche Telekom AG (NYSE: DT) has for years been lobbying for a "regulatory holiday" for its next-generation broadband access network. (See EC Threatens Germany With Court Case.)
Now, though, those holiday plans are in tatters. Europe's carriers maybe thought they had it tough when Viviane Reding was laying down the law: Kroes looks to be just as formidable a watchdog. (See Reding Replaced as Europe's Telecom Watchdog.)
— Ray Le Maistre, International Managing Editor, Light Reading