Local Loop

What does local loop mean?

The local loop, also known as the "last mile", is the physical line between the local exchange or main distribution frame of a telecommunications provider and the telecommunications connection unit at the subscriber's premises. In most cases, this line is made of copper and enables access to telephony and internet services, including DSL. The local loop is therefore an essential connection for access to modern communication services.

The local loop plays a crucial role in the provision of DSL and broadband services. As it forms the final section of the connection between the telecommunications provider's network and the end customer, the type and quality of the local loop determines how fast and stable the internet connection is for subscribers. Copper lines, which are widely used, enable fast DSL connections, while the expansion of fiber optics further increases speed and capacity.

Local loop in practice

In Germany, the local loop is mainly operated by Deutsche Telekom, which also leases this line to competitors who do not have their own network. These providers pay a so-called rental fee to Deutsche Telekom, which is regularly set by the Federal Network Agency. The amount of the fee is determined on the basis of a compromise between the demands of Telekom and the offers of competitors. This regulation ensures fair competition on the telecommunications market and ensures that smaller providers also have access to the infrastructure.

Cabinet-based local loop

While the traditional local loop covers the entire distance from the central office (exchange) to the customer’s premises (termination point), the cabinet-based local loop refers to the segment connecting the street-side distribution cabinet (primary connection point) to the customer. Providers that have extended their networks to these cabinets only need to lease the shorter local loop segment from the incumbent operator (e.g., Deutsche Telekom in Germany), which reduces rental costs. This allows competitors to offer broadband services at a lower cost, particularly in densely populated areas.