This fact sheet provides a history of the rollout of Digital Subscriber Line (DSL) products and gives an update on current progress and upcoming developments.

Contents

Progress update – an update of the major advances over the past month and upcoming developments.

Annex A – History of ADSL

Annex B – Products

Annex C – Technology

Annex D – Investigations

Progress update: January 2002

This update focuses on progress made in the last month and is not intended as a complete overview of ADSL rollout. References to operators (OLOs) are to companies, other than BT or Kingston, which operate telecommunications systems. Service Providers (SPs) are companies that provide telecommunications services to third parties, eg consumers. The Annexes attached to this fact sheet give further information on DSL and are arranged according to subject area.

1. Rollout

BT:

All of Kingston’s exchanges in the Hull area are now enabled to deliver ADSL.

2. Takeup (as at end of January)

BT: ~138,000

Kingston: ~10,000

3. Self-install

BT launched self-install variants of its IPStream products on 15 January 2002. IPStream Home and Office removes the need for an engineering visit to a customer’s premises, thereby reducing the costs to both BT and the customer. Both IPStream Home and Office have a connection charge of £50 (ex VAT). IPStream Home has a monthly rental of £25 per month (ex VAT), with the rental for IPStream Office ranging from £60 to £100 per month (ex VAT), depending on speed.

4. Special offers

5. Upcoming Developments

VideoStream: new rental and connection prices will apply to BT VideoStream from 1 March 2002, including new volume discounts. Details of the new prices and discounts can be found at http://www.serviceview.bt.com/list/notifs/25-01-2002/Broadband/12075.htm.

Marketing grants: BT has awarded marketing grants of up to £75,000 to service providers in an attempt to increase broadband takeup. The service providers had been encouraged during December 2001 and January 2002 to put forward schemes that would increase volumes.

Central Plus Trial: BT has announced plans to trial BT Central Plus from 11 March 2002. BT Central Plus is an enhancement to the BT IPStream portfolio, that will allow Service Providers to connect their End Users directly to the Internet. A full launch of the product is targeted for May 2002.

e.Co Gateway: BT has announced the successful conclusion of phase 1 of its pilot of the 'e.Co' order entry system (release 3.0) for the provision of Broadband orders. Existing pilot service providers have the option to take part in the next phase of the pilot (release 3.3) or remaining on release 3.0. Service providers who have not participated in the recent pilots can decide if they wish to migrate their order entry operations onto release 3.0 or wait for the full deployment of release 3.3.

Annex A

History

BT took a commercial decision to roll out ADSL products. Oftel has been involved in monitoring rollout to ensure that BT complies with its legal obligations under the Competition Act 1998 and the terms of its Licence. BT must not, for example, unduly prefer its own SP business.

Kingston took a similar decision at the start of October to roll out ADSL products. All of Kingston’s exchanges in the Hull area are enabled to deliver ADSL and Oftel will ensure that Kingston complies with its legal obligations under the Competition Act 1998 and the terms of its Licence when offering ADSL products.

Annex B

Products

1. BT Wholesale Products

2. Kingston Wholesale Products

There are currently around 200 customers taking these products from BT and Kingston. These include local authorities and large firms who are using the products as part of their internal networks as well as service providers and other operators who are using the products to offer services to residential and business customers. There are approximately 40 service providers offering services to residential customers and 70 offering services to business customers.

Annex C

Technology

ADSL

Asymmetric Digital Subscriber Line (ADSL) technology transforms a normal telephone line into a high-speed digital line that enables access to telephony services and the Internet at the same time. ADSL provides always-on, always-available access to the Internet at speeds that are 10 to 40 times faster than a standard 56k modem.

Rate adaption

ADSL is normally only available to those living within 3.5km of an ADSL-enabled local exchange, but this can be extended to 5.5km for rate adaptive variants of the products. Rate-adaption is achieved through relaxing the line qualification limits, enabling the upstream path (away from the End User) to rate adapt to between 64kbit/s and 250kbit/s depending on distance from the exchange and traffic levels. The downstream speed (into the End User) remains the same at up to 500kbit/s, providing continued high speed Internet downloads.

Wires-only (G.DMT)

G.DMT services are ‘wires-only’ variants of wholesale DSL products. BT will continue to provide the network elements, ie the wires, with the service provider supplying the end-user equipment, such as the modem. This is one step towards an ‘off-the-shelf’ modem/CPE product.

Self-install

Self-install products are the step beyond G.DMT. They will enable end-users to purchase CPE ‘off-the-shelf’ and install it themselves, eliminating the need for engineer installations.

Annex D

Investigations

BT’s ADSL rollout was a commercial decision. However, since BT announced its rollout plans, Oftel has been involved in monitoring rollout to ensure that BT complies with its legal obligations under its Licence and the Competition Act 1998. This monitoring process involves having weekly working level meetings and monthly high-level meetings with BT. Kingston has also introduced retail and wholesale ADSL products.

Oftel has also conducted a number of investigations into allegations of anti-competitive behaviour. Some investigations were the result of industry complaints, others have been initiated by Oftel itself. More detailed descriptions of most of these cases can be found in Oftel’s Competition Bulletin, which is published on a quarterly basis. Click on the case title to view the respective Competition Bulletin entry. (Please note, not all cases will have been published in the Bulletin yet).

Current cases:

a) Alleged Margin Squeeze

Last year, we investigated allegations that BT was cross-subsidising its service provider, BTOpenworld. In January 2001, we decided that BTOpenworld's original business case was not implausible and therefore, that there was no evidence of a cross-subsidy. We decided, however, to monitor and review the situation after six months to see whether anticipated revenues from e-commerce and advertising were realised. This review is continuing.

Contact: Naaz Rashid (8849)

b) DSL ATM Interconnection

Energis and Thus referred a dispute with BT concerning an ATM-level interconnection product to us for determination. We have been asked to undertake a market review, and to determine the prices and terms and conditions for the product, including service level agreements/guarantees. Oftel published a draft Determination on 21 December 2001 setting out its proposed interconnection arrangements. Oftel is proposing to require BT to provide two new interconnection services, using both ADSL and SDSL technology, which should increase the type of broadband access services offered in the market. Oftel will ensure that prices for these new services are set at a level that encourages competition between the different providers of broadband services. The consultation on Oftel’s proposals for the new broadband interconnection products closed on 25 January 2002 and the final Determination is expected to be published by early April 2002.

Contact: Sara Elgstrand (8976)

c) DataStream Pricing

We have also opened an own-initiative investigation into whether BT's recently announced prices for DataStream Home and Office are too low. The concern is that the prices might be designed to reduce or eliminate competition from LLU operators. We requested a substantial amount of information from BT, which we have now reviewed. A number of follow-up enquiries were made, and we are in the process of reviewing the responses.

Contact: Sam Parr (5360)

d) BT's wholesale prices

Following the receipt of a complaint, Oftel is continuing to investigate allegations that special offers and price cuts on BT's wholesale products are anti-competitive. A detailed information request was sent to BT and Oftel is currently reviewing the information received in response to this request.

Contact: Naaz Rashid (8849)

e) Alleged margin squeeze on the business products

Further to the complaint concerning the special offer on the installation charges for BTOpenworld’s Business 500 Plus product (see case viii), Oftel has opened an investigation to consider whether there is any margin squeeze on BTOpenworld’s ‘business’ products. This investigation will have strong linkage with the current review of the alleged margin squeeze on BTOpenworld’s ‘At Home’ residential product (see case i).

Contact: Sam Parr (5360)

Closed cases:

f) Wholesale DSL Terms and Conditions & Service Level Agreements

Oftel examined an industry complaint regarding BT’s contract terms for its wholesale DSL products. The xDSL industry group argued that the original terms, (which did not include Service Level Agreements (SLAs) or Service Level Guarantees (SLGs)), were so unreasonable as to represent an abuse of a dominant position, given that BT is currently the only supplier of wholesale ADSL products.

Following consultation with industry, BT introduced a new version of its terms and conditions, including SLAs, which came into effect on 1 September 2001. BT introduced SLGs on 31 December 2001. Oftel has now concluded that BT’s wholesale terms and conditions did not have a material effect on competition and has issued a non-infringement decision to this effect.

Contact: Steve Burniston (5361)

g) Rate Adaption

Oftel opened an own-initiative investigation into BT’s rate adaption technology, which extends the reach of ADSL from approximately 3.5km from an enabled exchange to approx 5.5km. BT introduced rate adaption on its IPStream 500 wholesale product, but not on any others; in particular, it did not introduce it on the products that are designed to be more suitable for supplying services to businesses. After we started our investigation, BT told us that it had developed a timetable for the introduction of rate adaption on its ‘business’ products. BT has now confirmed that from 10 December 2001, rate adaption will be available on the IPStream S500 product. In view of this, and having completed our other enquiries, Oftel has closed the case.

Contact: Sam Parr (5360)

h) Special offer investigation

Oftel received a complaint concerning BTOpenworld’s special offer of half price installation on all orders for its Business 500 and Business 500 Plus (multi-user) products, running from 18 September to 31 December 2001. The concern raised was that BTOpenworld was able to offer reduced installation fees for Business 500 Plus, without a corresponding reduction in the installation charges for the wholesale derivative, IPStream S500. It was also alleged that BT was providing BTOpenworld with advance notice of price changes. Oftel has now closed the case after finding no evidence that BT had been providing BTOpenworld with advance warning of price cuts. The issue of the special offer is being dealt with as part of Oftel’s investigation into an alleged margin squeeze on BT’s business products (see case v).

Contact: Lawrence Knight (8747)

i) Alleged passing of confidential information to BT Openworld

j) BT ADSL installations

k) BT Openworld marketing