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The liberalisation of the 'last mile' of fixed-line phone networks is critical for the survival of Europe's alternative carriers, Internet service providers and broadband application developers. But it is proceeding at a snail's pace, according to a new survey by the European Competitive Telecommunications Association (ECTA), the telecoms trade association.

Some 12 months after incumbent operators were legally required to open their local exchanges to alternative carriers who want to provide lower-cost broadband Internet access through digital subscriber line (DSL) technology – a process known as 'local loop unbundling' – ECTA found that less than 0.01% of all phone lines in the EU had been unbundled by January 2002.

Broadband penetration across the EU's fixed-line networks is running at just 2% of total phone lines, while of the 4.1 million phone lines that have been upgraded, only 3% are provided by alternative carriers. Put another way, incumbents such as Deutsche Telekom, France Telecom, Telecom Italia, Telefonica and BT control 97% of this new, supposedly competitive, market.

ECTA managing director Phil Evins urged ministers to "address this problem" during the EU summit in Barcelona in March 2002. "Local loop unbundling is not delivering a competitive market in local connections for Europe's businesses or consumers," he says. In November 2001, the European Commission said it would take action against any EU states dragging their feet over unbundling. The following month, it carried out its threat, starting legal proceedings against Germany, Greece and Portugal. Some observers, however, questioned why Germany, with more than two million DSL phone lines, was being targeted while Ireland, without even one, was not.