[Gllug] To LLU or Not to LLU?

[Peter Corlett]

On Thu, Mar 26, 2009 at 11:31:00AM +0000, Juergen Schinker wrote:
[...]
> the market needs to be liberalized and BT forced to sell the last mile or
> rent it to a very reasonable price ...

The market *has* been liberalised. It turns out that the last mile is
extremely expensive to provide and so most telcos would rather rent it from
BT. Because BT has a monopoly position, their pricing has been reviewed by
Ofcom, who deem it reasonable. I mostly agree with Ofcom.

[...]
> but who knows maybe wireless will bring movement to the market

> as soon as private companys start laying their own wires/networks prices 
> will drop and bandwith will increase

Yeah, right.

In the early days of telephone service, there were multiple competing
private operators. They eventually lost money and ended up being privatised,
becoming part of the GPO. That's how BT's network got started.

In the 1980s and 1990s, cable companies started installing their own last
mile cable networks. Unfortunately, the build out was very expensive - of
the order of a thousand pounds per customer - and the service tended to be
worse and more expensive than BT. Eventually they all went bust or merged,
producing the Virgin media we have today. Virgin's service is infamously
awful, probably because they can't afford to make it work properly.

There was also Ionica in the 1990s who used wireless for the last mile. They
too found build-out too expensive and went bust in 1998. Eventually, BT was
compelled to come in and pick up the pieces, subsidising Ionica in its last
days and ensuring the customers continued to have service. Ionica never even
got as far as offering Internet access.

It thus seems that it is not possible to provide a service cheaper than BT
and still make enough profit to stay in business. This implies that BT's
prices are about right.

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