Life Beyond CPS

Opal Telecom Managing Director Mark Hollister says that his company is embarking on an extensive local loop unbundling (LLU) program; “A number of elements have come together to make LLU more viable – the technology used is in its second or third generation, IP applications are maturing and the impact of LLU can be extensive in the economy.”

Opal is spending over £120m to un-bundle 1000 exchanges and develop their own next generation network but Hollister cautions all when he says “Most people don’t realise that broadband contention rations are more important than the high headline speeds being promoted. LLU is also not just about broadband; it will also fundamentally change today’s voice network cost base.”

With regards to channel opportunities Hollister sees cost based competition via WLR/CPS in the voice market quickly approaching, “Tomorrow’s next generation voice networks will have an inherent cost advantage which will impact the owners with traditional resellers business models. Transaction exit values and multiples for voice businesses are already falling and likely to decline even further.”

Hollister puts this down to the fact that BT’s connection costs are significantly higher for unbundled services which is likely to result in longer term customer contract periods and therefore competitors with access to LLU based networks will have both a cost and reduced churn advantage.”

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