8.1 Definition and overview

Local Loop Unbundling (LLU), shown in Figure 8.1, is the making available by a telecommunications operator of its physical customer access connections for use by other operators or service providers. These connections, typically thousands or millions of insulated copper pairs, provide the links between customers' premises and serving local exchange sites. Local exchanges provide the gateway to local and long distance services, and via indirect access to competitor network services. The UK incumbent operator, BT, has for example 43 million copper connections giving access to 98 per cent of the national population, while 28 million of these are in revenue-earning service. Such an access network has a replacement cost in excess of 20 billion pounds, representing a large and ubiquitous asset that is unlikely to be replicated and so gives its owner considerable market power.

Figure 8.1: Typical incumbent network architecture showing the access network.

Unbundling of various parts of the total service package offered by former monopoly operators has provided a means of introducing and sustaining competition, given that the scale economy and ubiquity of the former monopolist cannot readily be duplicated. Indirect access (see Section 5.3.4), for example, permits the unbundling of long distance service, allowing a customer to obtain this from a competing network while retaining the access and local services of the incumbent. Local loop unbundling of the copper pair service provides an opportunity for another operator or service provider to obtain all the facilities of the copper loop in by-pass...