Broadband ISP TalkTalk ( AOL , Tiscali ) has accused BT of abusing using its new generation of superfast 'up to' 40Mbps FTTC broadband ISP services as a means to "recover the monopoly position that it lost many years ago" through local loop unbundling ( LLU ), which allowed rival ISPs more control over the operators traditional copper lines.

However, while LLU allowed ISPs to offer ADSL (up to 8Mbps) and ADSL2+ (up to 24Mbps) based broadband services at lower prices, FTTC is a different kettle of fish. So far the best ISPs can hope for is a more restrictive alternative called Virtual Unbundled Local Access (VULA) that doesn't give them the same level of price flexibility or service control.

The only other alternative is Physical Infrastructure Access (PIA), which effectively requires an ISP to build its own infrastructure and many believe that BT will set the final prices far too high (here) and thus Ofcom might have to intervene (here). This could take over a year to resolve and meanwhile the government's Broadband Delivery UK (BDUK) office has already begun distributing its £530m budget (here).


The situation means that most BT based ISPs are forced to use the operators own BT Wholesale solutions for FTTC, which are a bit on the pricey side. Meanwhile big rivals cannot compete for public funding while the situation surrounding PIA pricing remains unresolved. As a result Goldie believes that the BDUK bidding process indirectly "favours one party" (BT).

Regular readers will recall that the previous government and Ofcom both allowed this as a trade-off for encouraging BT to expand its superfast broadband ambitions. Indeed BT is currently investing £2.5bn to bring its FTTC services within reach of 10 Million homes by 2012 (40% of the UK), rising to 66% by 2015; some 2.5 Million premises will also get access to 100Mbps+ FTTP technology. BT claims that it could reach 90% of the country by 2017 (the government's target for 2015) if all of the public funds went its way.

Competition is of course what gives the current broadband market its variety and low prices, if that is eroded then we could all end up paying more for superfast access. The good news is that Ofcom will eventually have to act; the bad news is that it might take awhile.