Ref:54/02
10 September 2002

Business users will benefit from a new pricing and quality regime for high-speed, always-on communications services proposed today by Oftel.

Prices for BT wholesale products, which enable other operators to offer leased lines to UK business customers, will be significantly reduced under Oftel’s proposals.

This move is designed to bring down prices significantly for end users and operators by boosting competition in the leased lines market.

These savings will be backdated to 1 August 2001, when the products were first introduced by BT, following an earlier Oftel initiative.

Leased lines are permanently connected communications links between two or more sites. Today’s decision relates to partial private circuits (PPCs), the key wholesale components of leased lines, which enable other operators to use BT’s network to deliver services to their own customers.

Under the proposals - which are based on a detailed investigation of the market - connection charges for PPCs will be reduced typically by 50 per cent, and rental charges by 30 per cent.

These reductions will ensure that BT’s charges are cost-orientated and will support Oftel’s aim to encourage greater choice and better deals in the provision of business-to-business high-speed communications services.

Oftel also proposes improvements to BT’s service level agreements for the provision of PPCs, including proposals that BT should pay compensation for late delivery.

David Edmonds, Director General of Telecommunications said today:

"Oftel’s proposals will allow real price competition in broadband services for businesses.

"The proposals are the result of a detailed investigation of the leased line market which found that BT’s wholesale charges for leased line services are too high and that these prices should be reduced to reflect costs.

"Telecoms operators should pass on these significant price reductions to their business customers of leased lines services.

"In addition, improved service level agreements will give operators the certainty they need to compete effectively with BT in the leased lines market.

"Businesses will benefit from wider choice and lower prices for leased lines services. Greater use by businesses of high-speed services will increase their competitiveness and bring many benefits to the wider economy."

David Edmonds said that today’s announcement brought a highly complex project close to completion.

"Today’s proposals build upon Oftel’s earlier decision to require BT to provide specific PPC products to other operators. Oftel was the first regulator to require partial private circuits. Our proposals on prices and service levels should have a significant impact on the market.

"Together, this package of measures should ensure that business consumers - from small local businesses to large city firms - see the full benefits of competition in the leased lines market.

"Today’s proposals underline our determination to set fair prices and insist on robust quality standards to ensure that those aspirations are properly implemented."

Oftel has invited comments on its proposals which must be received by 8 October and expects to announce a decision in November, having considered all responses.

Notes to editors

1. Today’s draft direction can be found on Oftel’s website at www.oftel.gov.uk/publications/broadband/leased_lines/ppcs0902.htm. Hard copies are available to the media from Oftel’s Press Office on 020 7634 8991 and to the public from the Research and Information Unit on 020 7634 8761.

2. Oftel’s first direction on PPCs, published in June, is available at: www.oftel.gov.uk/publications/broadband/leased_lines/ppcs0602.htm. The draft first direction, published in December 2001, is available at www.oftel.gov.uk/publications/broadband/leased_lines/ppcs1201.htm.