A year in review: Local loop, BT's last monopoly

The local loop is important because breaking BT's ownership is key to reducing internet access prices, and introducing high bandwidth services such as ADSL.

Late in 1998, telecoms regulator Oftel announced its timetable to introduce competition in the last mile. It covered a complex series of negotiations and procedures to allow rival operators to install their equipment in BT exchanges, which set a deadline of full unbundling of July 2001. Telcos and ISPs thought this was far too lenient a deadline, allowing BT to continue its monopoly for another two years, and allowing the US to continue stealing a march on the UK on ecommerce.

The year 2000 was a lively, if ultimately frustrating year. The issue kicked off in February when UK Chancellor Gordon Brown waded in with a speech insisting Oftel should bring forward its timetable for unbundling. He told the Smith Institute in London that unbundling was key to greater competition with the US. Oftel was conspicuously quiet.

Meanwhile, the issue rumbled on with announcements of the first unbundled local loop trials in Belfast, Edinburgh, Leeds and London, and changes to BT's licence conditions to allow the unbundling to take place.

In the summer, the European Commission threatened to throw an industrial-sized spanner in BT's works by recommending all unbundling should be completed by the end of the year.

Oftel and BT responded by saying the timetable was unrealistic, quite fairly noting that unbundling was actually much further progressed in the UK than in many other European countries. Anyway, it said, some exchanges were already open, so technically it was complying.

The end of the year was characterised by spats between BT and other telcos over minutiae of the timetable, against a background of BT increasingly struggling to drag itself out of a financial and organisational mire. Some telcos were unhappy at BT's launch of ADSL services, pre-empting its rivals' inability to compete as ADSL relies upon access to the local exchange.

As we reach the new year the position is still unresolved, with the EU theoretically at odds with Oftel. However, any formal confrontation seems unlikely with the July deadline now looming ever closer.

A final piece of winter heat was added by the roasting Dave Edmonds, director general at Oftel, received at the hands of a DTI select committee. Accused of being both "lazy and complacent", the regulator was panned for not sorting out issues such as unmetered access and high-speed access.

The real question for the year ahead is, once the exchange is unbundled - as it should be, give or take heel dragging, in six months from now - what benefits will this have for UK businesses and UK consumers?

Consumers are unlikely to notice the difference with ADSL, at least in the short-term, too expensive to be realistic for the average punter. However, the launch of wholesale flat-rate dial-up internet access services from BT and other ISPs this year will ensure that consumers continue to get falling access prices.

However, ambitious small businesses should be able to finally look forward to affordable, high-speed internet access, at a fraction of the cost of leased lines. If UK business is intelligent, we should be able to start making up the lost ground with the US.