Examination of witnesses (Questions 20
TUESDAY 14 NOVEMBER 2000
and MR JIM
20. The assessment of the number of sites that
you came to of 381 was based upon the requirements of the 30 companies.
Did that take into account any ability for BT to be able physically
to be able to accommodate some of the kit that was going in or
was that done first and then, when you had reached the results
of that, you went to BT and said basically, "Can you deliver?
Yes or no"?
(Mr Edmonds) It was the other way round; it was the
latter. The companies establish their own priorities. They then
go to BT. Oftel is there to establish the process. It was an order
of priorities set by the companies.
21. At that stage without any sort of contact
while they were sorting out their priorities and as to whether
BT were able to accommodate their requirements: that was a sort
of second stage?
(Mr Edmonds) Immediately the sites had been identified,
the operators then put in their survey requests, yes.
22. I asked that because of course BT claim
that in some of the sites they just physically cannot accommodate
the equipment. Have you done any independent assessment to verify
their claims? If you have not, who has, if anybody?
(Mr Edmonds) Yes, we have and, yes, we will. Of the
sites surveyed so far, as my colleague has just said, there is
a very high percentage, 83 per cent, where it is believed that
there will be sufficient space. My goal, sir, is quite simple
in the medium to long term. It is that every operator that wants
to unbundle a local loop, who wants to get into a local main distribution
frame, this piece of the BT network, should be able to do so.
Therefore, I have actually had my Director of Technology go, I
think so far, to eight sites and he has looked for himself at
the response made by BT when they say there is no space there.
What we aim to do, though, is to create a process. As you know,
the regulator is all about creating process that people can use.
What we aim to do then is to create a process. So that where BT
come back and say, "There is no space", and in one or
two cases there was no space, a different route of building elsewhere,
use of the car park, whatever, is fed into the process. If BT
comes back and says there is no space, we will then have a formal
piece of process that will have to be gone through to determine
what happens next.
23. We are going to take the scenario where
in a particular building additional space has to be created in
an adjacent building; who is going to foot the bill for that?
Will it be BT or the companies that want to gain access to it?
(Mr Edmonds) The basic premise is that costs are met
by the companies that unbundle the loop. That is the premise that
obtains throughout unbundling in both America and in Europe.
24. Are you setting any sort of parameters on
that in terms of access to buildings, costs of surveys, et cetera?
(Mr Edmonds) We will intervene if there is any substantiated
suggestion that BT is charging more than cost. That is our job.
We will get involved in the process.
25. For the benefit of the Committee, in terms
of the equipment that is going in, and BT have claimed that they
have insufficient space, is it large equipment racks that are
going in, separate individual racks for each operator?
(Mr Edmonds) Yes.
26. Presumably, in some buildings you could
have 30 full-size equipment racks, one for each operator?
(Mr Edmonds) If I hold up that piece of paper, a d-slam,
a piece of kit, is a bit bigger than that, and you have three
of those and they take up that amount of space, but if you have
ten or more different operators wanting space, clearly there are
constraints. There is also the issue of ventilation. If you put
all this stuff in, it creates a lot of heat. BT have got to put
the power supplies in. BT want to put all of this in a separate
cage so that there is no issue of its own security being compromised.
When we are perhaps criticised for pushing back into the industry
some of this detail, I would ask the Committee to bear in mind
that it is a very complex, technological process on the ground,
as well as a rather complex economic process. What we are absolutely
committed to is making sure that BTand this is what they
agreed to on Fridayhave very tough deadlines; 80 days to
build a room, 70 days with kit pre-ordered, 20 days where the
operator provides a cable. There is a mass of detail and fact.
27. It is just as well you started now and did
not wait until the end of July, is it not?
(Mr Edmonds) We started this process back in March
of this year.
28. All that you tell us suggests that you should
have been there that much earlier. You have known the technical
problems involved. You could have had the arm up BT an awful lot
earlier than this, with respect.
(Mr Edmonds) No, I am sorry, I honestly think that
is unfair. We set up four working groups between the industry
and BT and they have been working on this set of issues throughout
the middle part of this year. As each stage has gone on, different
issues have sometimes been identified and different issues have
been resolved. Do not forget that I did not actually have the
statutory power to enforce this until August of this year. I put
your question back quite hard: how could I have done it faster?
I actually think that Oftel, working with the industry, and I
give great credit to many parts of the industry, has done remarkably
well to get to the point where we now are; ie we will be compliant
with the European Regulation. How many of the rest of the EC members
will be as compliant as we are? That is a very interesting question.
29. Would you necessarily need to wait until
you had a statutory power before you started the planning? This
is not a new issue. This Committee first considered this issue
in 1994 as a Committee. Clearly Parliament was thinking along
these lines. Should not Oftel have been thinking along these lines
and doing a bit of strategic planning in advance of statutory
powers? If you were a proactive regulator, should you not have
been pressing the government for earlier statutory powers?
(Mr Edmonds) I have been a proactive regulator. I
was appointed three years ago. Within seven months of my arrival,
I had produced a consultation document on local loop unbundling.
30. I am sorry, I was not referring to you personally,
Mr Edmunds; I meant Oftel in general.
(Mr Edmonds) I think that the view in Oftel, until
my arrival, was that we could rely probably on infrastructure
competition and that unbundling in the format that we have now
gone for it was not one of the priorities that we set. As soon
as we did set it as a priority, and I am sorry if I am appearing
defensive, we have worked on a very fast timescale. We have been
working concurrently. We did not wait until we got the licence
amendment to set these working groups up. We set these working
groups up back in March, as soon as we had published a draft licence
amendment. You are quite right, Chairman, if we had not done all
of this we would be nowhere near able to meet the 1 January deadline.
31. But you knew that the European legislation
would impose deadlines which you were unlikely to be able to comply
with? Miss Lambert spent a long time with the Commission.
(Mr Edmonds) The Regulation was published in July.
(Ms Lambert) Yes, the Regulation was published in
July 2000it had been in draft formby which time
our process was already well advanced. The group to which David
has referred was already established. I think it is also worth
pointing out that the Regulation requires BT to make a reference
offer from 31 December 2000. But it made a reference offer in
August. In a lot of respects, we are ahead of the Regulation.
We have been working very hard to keep there.
32. Are you saying that the European requirements
were unreasonable in terms of the timescale that they were envisaging?
(Ms Lambert) Not at all. I say that we are ahead of
them in certain respects.
(Mr Edmonds) I think what we are saying is that many
other European countries will find it hard to be compliant.
33. May I ask one point about your Director
of Technology's business? He sees how difficult it is and sees
the amount of space. In this rather small sample, were there instances
where BT had said there was no space and, lo and behold, space
(Mr Edmonds) I think the knowledge that the Director
of Technology is going to be out there patrolling the space probably
concentrated minds wonderfully. Generally, the feedback that I
have had from him is that in one or two cases there is no space
whatsoever; in one or two other cases there may be space that
is utilisable. What we aim to do, as I said before to Mr Laxton,
is to create the process, so that there is, if you like, a flow
chart: they come back and say "no space" and you then
go through a flow chart actually to determine whether that is
the case. If there is a dispute, Oftel will then have the ability
to intervene directly on a site-by-site basis.
34. So you will be the ultimate arbiter. You
(Mr Edmonds) If the competitor who wants to unbundle
complains that BT is being unreasonable, that BT is not fulfilling
this licence condition, which is to make local loop unbundling,
yes, we will be.
35. How do you do that? Do you fine them or
lock them in jail?
(Mr Edmonds) That is tempting! At the moment we go
through this process where we have a complaint; we investigate
the complaint according to all the rules of natural justice; we
listen to both sides; we then make a provisional order, if we
have to, asking BT to produce a remedy. If they do not, we will
produce a final order. If a final order is produced, which BT
do not comply with, the competitor company has the ability to
go to law and get damages. That is the process. It is cumbersome.
That is why I answered your previous question the way I did.
36. How long would that take?
(Mr Edmonds) That can take probably three months.
37. Can I clarify one final point on accommodation
arrangements. You said that BT wanted some element of security
of the kit, the racks of equipment within a cage. Are they wanting
to physically separate that equipment from their own equipment,
so that there is a separate means of access for other telecoms
operators to come in and work on the equipment?
(Mr Edmonds) Not necessarily a separate means of accessI
think that would be difficultbut certainly so that the
kit is delineated in a part of the building in a way that is clearly
identifiable as the operator's. They want security around that
and they want fire precautions around that. As we have discovered
in many other countries, it is possible for an incumbent who wants
to be awkward to be very awkward in terms of the kinds of arrangements
that you are describing. One of our major objectives with BT has
been to tell them that their approach to these operators must
be to treat them as customers whose business they want, rather
than as a nasty incubus that is trying to come into the switch.
We have had some almost bitter conversations with BT during all
of this year. My colleague, Jim Niblett, used this analogy on
one occasion: if you have this kind of debate, you hit BT with
the club five times and on the sixth they finally come up with
what you want. We have had almost trench warfare for much of the
summer in trying and get this right. That is why when you, sir,
use the word "impotent", I do find it hard to take because
I think that we have been very tough indeed in a whole range of
discussions with BT. Had we not been, we would not be at the point
at which we now are, which is producing LLU in the UK on a timescale
which I genuinely think stands comparison with anywhere else in
the world. I think we are producing LLU on a timescale that beats
the commitment I gave to you, Mr Laxton, in the answer I gave
to you at the last meeting of this Committee.
38. That is not quite the impression of the
Committee. We have a submission here from Alcatel, which gives
a league table of who has done what and where we all are in terms
of statutory conditions in place, pricing available from the incumbent,
the incumbent accepting orders, delivery of co-location, delivery
of copper loops and volume availability of LLU. Germany has no
outstanding issues on that. They have clearly done it quicker
than we have. The Netherlands are way ahead of us. Some are further
behind; the French are further behind. But we have three outstanding
items which will not be available until 2001 and in terms of volume
availability not until July. Why is it that others within the
EC, who started behind us in these matters, have been able to
(Mr Edmonds) The one rebuttal I make of that is that
they started behind us.
39. All the evidence that we had back in 1994
when we considered this showed they were nowhere near where we
(Mr Edmonds) Indeed, I can only take responsibility
from 1998, for the actions of the organisation I have led since
then. Germany had primary legislation in 1997. The Netherlands
had primary legislation as well.