Ofcom proposes measures to lower leased line costs

Ofcom proposes measures to lower leased line costs

Ofcom has proposed to introduce measures to make the cost of leased lines cheaper for businesses.

The telecoms watchdog plans to impose limits on the wholesale prices BT can charge for products using leased lines. The move follows Ofcom’s Business Connectivity Market Review, published last month, which suggested that BT has significant power in the leased lines market and a cap on prices would protect buyers.

Ofcom has said that the Business Connectivity Market Review seeks to encourage competition in the leased lines market, and identify how best to sustain critical fibre networks between businesses. The consultation on the review was published on 18 June and will close on 24 August 2012.

A new consultation has now also been published which outlines proposals for what the limits on BT should be – it puts forward the idea of overall caps linked to inflation. This scenario is designed to align the prices of these BT products with their cost within the next three years. This consultation is open until 30 August.

The controls relate to two groups of BT services: legacy leased lines which use “traditional interface” (TI) technology, and newer telecoms lines based on the faster Ethernet standard for sending data at very high speeds over networks.

Ofcom proposes lighter price controls in certain areas in London where the leased lines market is more competitive. In these areas it suggests a safeguard cap on each relevant Ethernet service, meaning that prices would effectively be capped for three years.

A statement from Ofcom said, “Ofcom expects the proposed controls will lead to real-terms price reductions for most customers of the £2 billion leased lines market, such as businesses, schools, universities and libraries.”

It added, “Consumer mobile and broadband operators, which use leased lines to transfer data on their networks, would also see savings which could be passed on to customers.”