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24|06|04

Ofcom concludes Leased Lines Market Review and proposes charge control on Partial Private Circuits

Ofcom today published the concluding statement of its Leased Lines Market Review.

Leased lines are fixed telecommunications connections that provide dedicated capacity between two points. Ofcom is establishing a comprehensive regulatory framework which will cover all types of leased lines.

This framework is designed to encourage competition in the provision of retail leased lines and other data services provided to business customers. The market for UK leased line services is worth approximately (GBP) £2 billion per year.

Ofcom's market review sets out the following:

• A determination that BT (and Kingston) has significant market power in certain retail and wholesale leased lines markets.
• A general requirement for wholesale services (including all types of Partial Private Circuit (PPC)) to be supplied on fair, reasonable and non-discriminatory terms and at cost-based charges. PPCs are part leased lines that allow a communications provider to offer complete voice or data services to business customers in areas where the communications provider lacks sufficient network infrastructure of its own to do so.
• An interim reduction, equivalent to a 7% reduction in real terms of the average annual charge, in the BT charges for PPC terminating segments which were previously set by Oftel. The resulting charges will then stay in place until Ofcom implements its proposed longer-term charge control.
• Detailed obligations imposed by Oftel regarding the terms and conditions on which PPCs are supplied to be carried forward in substance.

As a result of these findings Ofcom has also today published a consultation on a longer-term charge control for PPC terminating segments to take effect from October this year. Ofcom is proposing to establish a charge control which will reduce the prices BT charges other operators for PPC terminating segments by between 8 - 20% in real terms over 4 years. Ofcom is seeking the views of the industry on the appropriate reduction within this range. The proposals allow BT a degree of geographic pricing flexibility, which will allow them to respond to any differences in competitive pressures.

Separately, BT has made proposals relating to the charges for PPCs on which Ofcom is also seeking the industry's views in the consultation. The effect of those proposals in aggregate is approximately a 25% reduction in real terms in PPC charges over 4 years. More specifically the effect of BT's proposals is to reduce:

• PPC terminating segment charges by approximately 4% over 4 years
• PPC trunk segment charges by 30-40% over 4 years.

The Leased Lines Market Review statement and PPC charge control consultation are available on Ofcom's website - see Related Items.

Ends.

NOTES FOR EDITORS AND CSEs

Ofcom is the independent regulator for the UK communications industries, with responsibilities across television, radio, telecommunications and wireless communications services.

For further details please visit www.ofcom.org.uk.

Ofcom Media Office
mediaoffice@ofcom.org.uk
(+44) (0)20 7981 3033

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