Oftel Plans Changes in U.K. Leased Line Prices

Prices for leased lines offered by British Telecommunications PLC (BT) are too high, and additional regulation may be necessary to force prices down, according to the U.K. telecommunications regulator.

BT is not offering suitable competitive pricing for its wholesale leased lines, the Office of Telecommunications (Oftel) said Tuesday, adding that it plans to step in to regulate wholesale prices.

Although wholesale prices for leased lines -- the permanent data or voice connections used predominantly by business subscribers -- were found by Oftel to be in line with "average European prices" they are still "much higher than those in the cheapest countries and in the U.S.," David Edmonds, Director General of Telecommunications for Oftel said in a statement.

Oftel may "set and control the prices of the wholesale terminating segments to be offered by BT," while at the same time encouraging commercial negotiations between BT and its wholesale customers, it said in a statement. Oftel will seek to strike a balance between acting as mediator in disputes between BT and its wholesale leased line customers, and "taking action on its own initiative rather than waiting for a dispute to arise."

Oftel's proposals arise from its review of competition in the market for national leased lines. Consultation on the plans continues until mid-November, when firm conclusions will be published.

Tuesday's announcement by the government regulator is in contrast to its decision last January to scale back government oversight of the telecommunications market in favor of industry self-regulation, in what Edmonds at the time called "the most significant change in Oftel's approach to regulation since 1984." [See "Oftel Rolls Back U.K. Telecom Regulation," Jan. 18.]Last January, Oftel also announced it was launching a three-year "major reviews of the telecom market." Tuesday's recommendations on wholesale leased lines are part of that larger report.

The regulation of both leased lines and local loops is currently under consideration by the European Commission. In July, the EC unveiled plans for a light regulatory framework for telecommunications in the European Union (EU). [See "Proposed EU Telecom Framework Unveiled," July 12.]Oftel said on Tuesday that its proposals are in line with EU regulations. Last November Oftel ordered BT to upgrade and open all of its local telecommunications network lines to competing companies by 2001. Oftel also directed BT to upgrade the local loops to handle new broadband digital services such as DSL (Digital Subscriber Line) by July 2001.

Oftel has come under pressure to be more aggressive in its efforts to ensure competition in the telecommunications and Internet access markets.

Last week both AOL U.K. -- a division of AOL Europe GmbH -- and AltaVista Co. lay blame at BT's door for the U.K.'s lack of flat-rate unmetered Internet access for consumers. [See "AOL UK Flat-Rate Internet Plan: Sooner or Later?," Aug. 25.] On Aug. 21, AltaVista admitted that its flat-rate Internet access plan -- which the company claimed it launched on June 30, with 250,000 customers signed up for the service -- wasn't actually in operation. AltaVista's chief executive officer Andy Mitchell blamed BT, saying it hadn't offered a competitive enough wholesale package to ISPs. It is a claim vehemently supported by AOL U.K. and just as strongly denied by BT.

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