Local loop unbundling deals with the access to the cable from the local telephone exchange to the premises of the customer (also called "the last mile"). It is one of the most contentious issues in telecoms regulation as it deals with competition aspects. Under Regulation EC/2887/2000, incumbent telephone operators have to give access to this local loop to new market entrants.

Overview

The telecommunications sector consists of two distinct parts: the infrastructure network and the services carried over the network on the other. The name that has been given to the "last mile" in the network, which allows subscribers to use the telecommunications services, is referred to as the "local loop", the "copper wire or wireless links between the subscriber's phone and the exchange to which they are connected". The advent of the new xDSL technologies offers the possibility to provide multiple services over the same pair of copper wires: this is referred to as "bundling". Arguing that the possibility to bundle services beyond the universal service (which is not yet open to compet ition), new operators are calling for "offerings to be unbundled on the local loop".
 

Within the EU, and most of the industrialised countries, access to the incumbents' local loop is governed by a widely diverging regulatory environment. An EU Regulation on local loop unbundling came into force on 2 January 2001, requiring incumbent operators throughout the EU to offer unbundled access to their local loops on reasonable request. Following, according to the Commission, slow progress in this process, it published a report on its sector enquiry and held an open consultation. The Commission's Competition Directorate-General on 8 July 2002 held a public hearing to fully analyse the remaining difficulties in the implementation of unbundling the local loop and the progress of competition in the provision of broadband access and services.

 

Issues

  • Shared access to bandwidth;
  • Pricing issues;
  • Distant co-location (a form of unbundling where the operator's equipment is located in a building outside of the incumbent's exchange)

 

Positions

The Independent Telecommunications User Group (INTUG) states that "The tactics of the operators require the adoption of detailed regulatory measures and the strict enforcement of competition law in order to avoid abuses and to overcome their resistance. Without these, new entrants cannot make use of the unbundled access and users cannot benefit from the competitive provisioning of services."
 

The German Bundesrat, upper house of Parliament, decided on 12 July not to approve an amendment to the national telecommunication law that would have created greater competition in the German local loops. This decision means the Commission will likely take the German Government to the European Court of Justice for failing to implement the EU Directive.

 

Timeline

  • The Commission's section inquiry into local loop is still ongoing;
  • No immediate other next steps foreseen.