Oftel SETS OUT CHARGING PRINCIPLES FOR PROVISION OF LOCAL LOOP UNBUNDLING

Ref : 60/00
Date : 16 August 2000

Oftel published today the detailed principles that it will use to determine wholesale charges for unbundled local loops.

‘Access to Bandwidth: Conclusions on charging principles and further indicative charges’ sets out the detailed charging principles for the provision of the loop, internal tie cables and co-location facilities.

Oftel will set the charges for the provision of the loop and internal tie cables on the basis of the principles set out in the document. A draft direction setting these charges will be published by Oftel in October, with a final direction issued in December. Oftel also expects BT’s charging on co-location to follow the principles described and will take account of these principles in resolving any dispute between BT and a co-locating operator.

At present, BT’s has proposed an annual rental charge to other operators for a local loop of £107 in most cases.

Today’s statement looks at the terms and conditions for local loop unbundling products in Austria, Denmark, Germany, the Netherlands and Italy, as part of Oftel commitment to monitor how the charges for local loop unbundling in the UK compare with prices in other European countries.

Anne Lambert, Oftel’s Director of Operations said today:

"Oftel’s charging principles published today cover the wholesale charges that operators will pay when taking unbundled local loops from BT.

"Oftel intends that the final wholesale prices to operators should be set at a level which will encourage competition in DSL services while preserving the incentive for investment in alternative networks such as cable and wireless local loop. This will enable operators to offer customers the services they want at competitive prices and promote the long term development of competition in higher bandwidth services."

BT has already published a reference offer for local loop unbundling and will start accepting orders for co-location from operators on 1 September 2000. Oftel confirms in the document that it expects that BT can deliver a good number of co-location facilities by end 2000 and start supplying unbundled local loops to operators from the beginning of next year, in line with the European Commissions proposed regulation on local loop unbundling.

Notes to Editors

1. ‘Access to Bandwidth: Conclusions on charging principles and further indicative charges’ is on Oftel’s website at http://www.oftel.gov.uk/competition/a2b0800.htm. Hard copies are available to the media from the Press Office on 020-7634 8991 and to the public from the Research and Intelligence Unit on 020-7634 8761.

2. Oftel’s May 2000 consultation document ‘Access to Bandwidth – Indicative prices and pricing principles’ set out a number of the high level principles for local loop undbundling. These included that the price of the loop will be cost-orientated, other charges should be based upon long run incremental costs plus a mark-up and that BT could request geographically de-averaged prices, if this can be shown to be justified by differences in the underlying costs.

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