Memorandum submitted by VIATEL
Viatel is a rapidly growing provider of communications
services to individuals, corporations and other carriers in Europe
and America. We have approximately 150,000 consumer and SME
customers in the UK and more than 400 large "enterprise"
Viatel's voice services include consumer and
business local and long distance calling, dedicated access and
point-to-point connections, calling card services. Internet access
and switched-minute wholesale services for other carriers. Viatel
also provides bandwidth to Internet service providers, application
service providers, and other telecommunications companies.
Viatel's advanced network technology and strategic
partnerships enable economical high-speed dedicated data circuit
provision, advanced data services (such as IP and frame relay
business networking services), virtual private network (VPN) services
and support for all required aspects of e-commerce infrastructure.
These include bandwidth, web hosting, IP transport and IT outsourcing
for companies seeking to rapidly deploy web services and applications.
When completed, our pan-European network will
link 59 major cities in the United Kingdom, The Netherlands, Belgium,
France, Germany and Switzerland. Viatel will also own and operate
metropolitan networks in London, Amsterdam, Paris, Berlin, Frankfurt
and Dusseldorf. Viatel also owns significant trans-Atlantic capacity,
including the fibre pair it now owns and operates on the Yellow
Submarine cable. Attached is a map of Viatel's UK and pan-European
The Government's goal is for the UK to become
a competitive and dynamic knowledge-based economy, capable of
sustainable economic growth with more and better jobs and greater
social cohesion. In order to seize the growth potential of the
new digital economy, the UK's businesses and citizens need access
to inexpensive, broadband communications infrastructure.
Companies like Viatel have been deploying large-scale,
broadband fibre-optic networks to facilitate the growth of the
"information superhighway". However, those highways
are useless unless we can provide "on and off ramps"
for the customers. It has been impossible for operators to replicate
the ubiquity of BT's access network, and BT itself has been slow
to deploy x DSL technology
in order to increase the bandwidth capability of its copper local
It is therefore recognised, both by the UK Government
and by the European Commission,
that requiring BT to provide alternative operators with unbundled
access to its local loops is the ideal way to enable the provision
of broadband connectivity to all types of consumer.
Whilst we applaud OFTEL's comparatively early initiatives
to introduce local loop unbundling, Viatel is concerned that OFTEL
has not taken a firm enough hand with BT over its implementation.
OFTEL issued a statement in November 1999
in which it announced its intention to require BT to make its
local loops available to other operators in order to introduce
competition in the provision of higher bandwidth services. However,
in that statement OFTEL decided that this service would not have
to be made available until July 2001.
OFTEL's view was that 18 months would be needed
in order for guidelines on operational processes (such as co-location
and order handling) to be completed, recommendations for a spectral
management plan to be adopted and published, and for BT to develop
its systems to enable it to process orders. We believe that these
time frames were overly cautious, especially in light of the ambitious
target set by the European Commission in its RegulationEuropean
incumbent operators to offer unbundled access by 31 December 2000.
We note that OFTEL adopted a similarly cautions
approach to the timing of the introduction of Carrier Pre-Selection
(CPS) in the UK (a subject which has been discussed at previous
Committee meetings with the Director General). In February 1999
it announced in a statement
that it had sought a deferment of the European Commission's 1
January 2000 deadline for introducing CPS on BT's network. OFTEL's
justification was that BT's switches had no latent CPS functionality
and so CPS could not practically be in place by that date. OFTEL's
preferred timescale was for CPS to be available for national and
international calls late in 2000, and the "all calls"
option to be available in late 2001. 
We believe that these examples suggest that OFTEL
has been overly willing to accept BT's arguments regarding the
technical difficulties in introducing new services. We hope that
going forward, OFTEL will start to take a firmer approach to BT
in order to encourage the sustainable growth of competitive services.
OFTEL decided back in 1999 that guidelines on
operational processes for local loop unbundling, such as co-location
and order handling, would be examined by a sub-group of the Operator
Policy Forum. This
sub-group (of which we were and still are a member) should have
been used as an effective way of reaching broad agreement on processes
and identifying genuine areas of dispute. However, we believe
that OFTEL did not intervene early enough in areas which were
clearly disputed and were likely to remain so, and that such a
co-regulatory approach was perhaps inappropriate in the circumstances.
A separate sub-group, which was charged with
negotiating the contract terms with BT, also ran into difficulties
due to BT's intransigence. When the members of this sub-group
discussed with OFTEL their inability to reach agreement with BT,
OFTEL demonstrated an unwillingness to intervene (by encouraging
the sub-group to continue their attempts to negotiate with BT
and by alluding to the time that a determination would take to
make) which compounded the delays from which the process is now
It is accepted that sector specific ex-ante
regulation is only necessary in the absence of full and effective
competition. However, in contested areas, where operators with
unequal bargaining power are on opposite sides of the negotiating
table, a mutually acceptable commercial outcome is unlikely to
be reached without ex-ante rules having been laid down by the
regulator. Where delay and obfuscation are of benefit to those
with market power, co-regulatory approaches are likely to be slower
than formal regulation and therefore less effective in tacking
that market power.
We hope that, in future, OFTEL does not attempt
to use the existence of operator groups liaising with BT as a
reason not to regulate.
Regulatory intervention still required
It is Viatel's experience from other countries
that, absent detailed proscriptive regulation from the regulatory
authorities, incumbent operators will seek to restrict and delay
the provision of loops to competitors. Incumbents will only ever
do the minimum required in this area, so a considerable level
of detail is required in the regulations.
Areas where we hope that OFTEL will provide
such regulatory intervention relate to:
the nature and availability of co-location
the equipment that can be housed
in co-location space;
lead times for provisioning of both
the space and the circuits; and
the information which BT is required
to make available to operators.
We are also extremely concerned about the fact
that commitments have to be made by operators in the absence of
pricing. We believe that there are a number of areas, concerning
charges proposed to be levied by BT in relation to co-location
firm intervention by OFTEL and an independence of thought from
BT's line of argument is required.
7 November 2000
5 Small and medium-sized enterprises. Back
The installation of Digital Subscriber Line technology at both
ends of a copper telephone line enables broadband connectivity
(at speeds of, for example, 2 Mbit/s) over the narrow-band copper
See European Commission's Proposal for a Regulation of the European
Parliament and of the Council on Unbundled Access to the Local
Loop. http://europa.eu.int/comm/information-society/policy/framework/pdf/com2000394-en.pdf. Back
"Access to Bandwidth: Delivering Competition for the Information
"Implementation of Carrier Pre-Selection in the UK." Back
It transpired that the European Commission would only grant OFTEL
a deferment until April 2000, which forced OFTEL to require the
introduction of "interim" CPS (using auto-diallers)
from April 2000 until the introduction of "full" CPS.
This was the subject of a High Court appeal by BT, the result
of which was legal uncertainty as to pricing and the consequent
inability on the part of the alternative operators to offer the
interim CPS service. In reality, there has been no interim CPS
since April 2000 as required by the European Commission. Back
A group which meets at OFTEL's offices where operators, BT and
OFTEL exchange information. Back
For example, charges for survey fees and refurbishments. Back