What is unbundling?
‘Unbundling’
is a term used by telecommunications lawmakers and regulators to describe the
case in which incumbent telephone companies (ex-monopoly national phone companies)
are forced by law or regulations to rent the ‘bare wires’ of their network to
their competitors. ‘Unbundling’ allows a competitor of the incumbent operator
to use existing telephone cables to connect potential customers to the
competing network, without otherwise using (and thus being dependent upon or
restricted by) the network technology and/or manpower services of the incumbent
operator. In deregulated countries,
‘unbundling’ is intended to increase competition in telecommunications
services – with the benefits of lower prices and a wider range of customer
offerings.
In the
case where an ADSL service provider chooses to use an ‘unbundled’ line to
realise his ADSL line to a customer, he has full decision power over the use of
the line. An operator using an ‘unbundled’ line provided by the incumbent is
not usually mandated to provide for ‘line sharing’ with a third operator.
Whether the ADSL operator chooses to provide a telephone or ISDN service over
the same connection is up to him. Typically, operators try to persuade or force
their customers to buy a complete package of ‘ISDN line and ADSL’, since this
provides them with the highest revenue income from the line. But maybe: with
the emergence of VOIP (voice-over-IP) as an increasingly popular means of
telephone service using the Internet, ADSL service providers will increasingly
be forced by the market to provide ‘ADSL only’ connections (without parallel
telephone or ISDN service).
As with
line sharing, the ADSL service provider usually pays a monthly fee to the
incumbent operator for an ‘unbundled’ line. In addition, he may be required to
pay a one-off installation fee, a one-off cancellation fee and service or fault
repair charges. The charges are usually much higher than the equivalent charges
for ‘line sharing’.
The prime
benefit of ‘unbundling’ is the independence from the incumbent operator. The
technology which may be used and its capabilities could therefore be exploited
to provide a more powerful service than that offered by the incumbent operator.
In addition, the service level is unconstrained by the skills and
responsiveness (or lack of) of the incumbent.