Contents

Key headline statistics

Narrowband

Broadband

1. Oftel’s research examines UK SMEs with 1-250 employees and a minimum annual turnover in excess of £50K

2. This figure includes residential and SME subscribers to ADSL, cable modem, fixed wireless and satellite services and services provided via unbundled local loops. It does not include leased lines.

3. 66% of people live in areas where the exchange has been upgraded, but BT advises Oftel that technical limitations mean approximately 6% of people in each exchange area cannot get the service.

    Oftel's aims

Oftel supports the Government’s targets;

• to ensure that everyone who wants it has access to the Internet by 2005; and

• to have the most extensive and competitive broadband market in the G7 by 2005.

Oftel wants to see the best deal for all consumers in terms of quality, choice and value for money. This includes choice of access speed (high and low-speed access) and services offered.

Oftel believes that competition is the most effective way of achieving these goals. Competition is working:

• In narrowband, UK consumers now have a wide variety of tariffs for dial-up Internet access. This includes both pay-as-you-go tariffs and unmetered packages. UK Internet access prices for residential consumers continue to be among the lowest in the world.

• In broadband, there is competition at the infrastructure level between cable modem providers and DSL, and numerous service providers competing with BT to provide retail DSL services to consumers. Take-up of broadband continues to increase substantially and prices compare well with elsewhere. Oftel is playing an active role in setting the regulatory framework for the broadband market, and is working closely with industry to pre-empt and resolve disputes.

Oftel is monitoring closely the evolving Internet markets through quarterly consumer surveys in the UK and a programme of regular international benchmarking.

3. Definitions

This brief summarises the key developments in the market for Internet and broadband services in the UK, and describes Oftel’s involvement in these markets. ‘Dial-up’ or ‘narrowband’ Internet access is used in this brief for access speeds up to and including 128 kilobits per second (kbps). 'Broadband' is used in this brief to refer to higher bandwidth, always-on services, offering data rates of 128 kbps and above.

This definition of broadband is used by Oftel for the purposes of measuring take-up in order to capture the dynamic range of services available to residential and business consumers that are classed by the industry as broadband. This definition gives Oftel data that is comparable with broadband take-up figures published by other countries in Europe.

For the purposes of specific market assessment and definitions of regulatory obligations, different definitions may be appropriate.

4. Monitoring the narrowband and broadband Internet markets

Oftel regularly monitors the UK narrowband and broadband markets and publishes its findings. Oftel’s International benchmarking study takes place every 6 months. The latest set of results published in December 2002 (based on services available in August 2002), includes the UK, France, Germany, Sweden, and the US states of Ohio and California. The latest report, which explains Oftel’s methodology in detail, is available at: http://www.oftel.gov.uk/publications/research/2002/benchint1202_1.htm

Oftel’s quarterly market research surveys ask residential and SME Internet users about their use and experience of the Internet, as well as measuring consumer awareness and use of broadband technologies. The latest report (based on a survey in February 2003) will be published in April 2003. http://www.oftel.gov.uk/consumer/research/research_index.htm

5. Key developments since the previous brief

5.1 On 25 March 2003, BT announced a range of new wholesale ADSL products, services and initiatives it will introduce this year which will extend the geographical coverage of broadband and expand customer choice. The main developments will be:

• autumn trials of new 256kbps and 1mbps ADSL wholesale services, with a view to commercial launches before the end of the year;
• extending the reach of ADSL broadband, so that more people connected to upgraded exchanges can get the service;
• trigger levels published on a new batch of 102 exchanges where registered demand is high (31 March 2003); and
• expanding trials of SDSL from the current 22 exchanges to 100, with a view to launching the service commercially in August 2003.

5.2 On 3 April, BT announced further plans:

• ADSL broadband to be brought within reach of 90 per cent of UK homes

• Wholesale DSL prices to be cut

5.3 From May 2003, Ntl will increase the speed and cost of its entry-level cable modem service. It will increase the monthly rental price of this service from £14.99 to £17.99 and increase the speed from 128 kbps to 150 kbps.

  Narrowband

6. Oftel's narrowband access and Internet policy

Oftel’s approach is to promote competition in the provision of access to Internet services, thereby giving consumers greater choice, better value and higher quality, and spurring take up. Oftel seeks to ensure that the level of regulation is proportionate given the level of competition in the market, while protecting and informing consumers where the market does not do so.

7. Overview of the UK narrowband market

The UK has a competitive dial-up (also known as ‘narrowband’) ISP market with both pay-as-you-go and unmetered packages available to consumers. Unlike much of the rest of Europe (including Germany and France), an offshoot of the incumbent telecoms operator does not dominate the UK dial-up retail market.

8. Availability

Dial-up Internet access is available to all UK households and businesses with a fixed telephone line. The vast majority of UK Internet service providers (ISPs) are available to consumers nationwide.

9. Take-up

10. Prices (December 2002 international benchmarking survey, prices as at August 2002)

For residential dial-up users:

• UK prices were cheaper than all other countries in the study for unmetered services; and
• For metered usage at peak times, the UK compared favourably with all countries and for off-peak the UK compared favourably with the US and France but prices were slightly above those in Germany and Sweden.

Comparison of residential Internet access prices as at August 2002

Source: Oftel International benchmarking report, published December 2002

For business dial-up users:

• UK prices for unmetered services were well below those in France, Sweden and Ohio but above those in Germany and California; and

• UK prices for metered services are below the US and Sweden, but above France and Germany.

Comparison of business Internet access prices as at August 2002

Source: Oftel International benchmarking report, published December 2002

11. Current narrowband products

There are a number of dial-up Internet access packages available to both residential and business consumers. These include:

• Metered ('pay-as-you-go') Subscription + cost of calls or No subscription - cost of calls only
• No subscription - cost of calls only
• Partly unmetered Subscription + free usage at certain times/for a certain amount of time + call costs at other times
• Fully unmetered Subscription + unlimited free usage + no call costs

11.1 Metered

In February 2003, 25% of Internet households were using narrowband metered packages to access the Internet (see chart below).

The UK pioneered the pay-as-you-go model, which has been copied by many other countries. Packages are now available which offer consumers Internet access at rates below the price of local-rate voice calls. Some packages include a monthly subscription fee in addition to the cost of calls, whereas others are ‘subscription-free’.

Subscription-free Internet access led to a rapid growth in the number of Internet users in the UK, and is likely to remain a good option for occasional or light users, and those who do not want to commit to a contract. However, the proportion of consumers using pay-as-you-go packages has fallen as more unmetered services have become available.

11.2 Unmetered

Fully or partly unmetered packages are widely available and used. In February 2003, 38% of Internet homes claimed to use some type of narrowband unmetered access (see chart below). Oftel estimates that just over four and a quarter million Internet homes subscribe to narrowband unmetered packages. In addition, around 2 million Internet homes are unsure which narrowband package they are using.

This is partly the result of Oftel’s directions requiring BT to make available unmetered wholesale Internet access products (called FRIACO, see paragraph 3.4.2 below). This has allowed more ISPs to compete in offering unmetered access and offer greater choice to consumers. Many ISPs offer FRIACO-based, fully unmetered retail packages for around £12.99 - £15.99 a month.

BT’s SurfTime Internet access products include unmetered Internet calls for a fixed monthly fee, as well as offering cheaper pay-as-you-go prices and discounted telephone calls. However, they do not include the costs of Internet service provision: in addition to SurfTime, consumers need to purchase Internet service provision from a participating ISP.

The cable operators also offer their customers unmetered Internet access.

At November 2002's e-Summit, BT unveiled details of a new product called 'Midband'. Midband will be an unmetered service, consisting of two 64 kbps connections bundled together to create a 128 kbps channel. BT is planning to begin trialling Midband in Spring 2003.

Type of Internet access used by UK homes connected to the Internet

Source: Oftel

*Survey figures

12. Alternative means of narrowband Internet access

Most people use a PC and fixed telephone line for narrowband access, but other methods are also possible.

12.1 Mobile

The mobile phone is likely to be another way of accessing the Internet (around 80% of the UK population are mobile subscribers). With the introduction of ‘2½ G’ technologies, such as General Packet Radio Service (GPRS), which provide higher data rate communications, WAP services have become faster and therefore more user-friendly. It is also possible to get mobile access to ‘real’ Internet pages (like those available using a PC) by combining a GPRS phone and a laptop or personal digital assistant (PDA)

All four existing mobile networks have deployed GPRS, although T-Mobile’s GPRS service currently covers only picture messaging. Orange also offers another 2½ G product, High-Speed Circuit Switched Data (HSCSD).

Third generation (3G) mobile technology is covered in paragraph 19.5 below.

12.2 Television

Internet access through the TV set is being offered by the cable operators. It is also possible to use TV set-top boxes to gain dial-up access to the Internet and some TVs have built-in Internet access. These and other means of access, such as games consoles, could become a popular means of Internet access in the future.

Accessing the Internet in these ways may be more convenient for some people who cannot afford, or do not want to use a computer. However, Internet access through the TV is not widely used at the moment.

The Office of the e-Envoy’s October 2002 consultation document on digital television explored the potential for digital television to offer wider internet access and to enable more people to access Government services electronically. A final statement following that consultation is due to be issued after Easter.

13. What is Oftel doing to promote competition in the narrowband market?

Oftel is taking action in a number of areas relating to dial-up Internet access to ensure fair competition:

13.1 Market reviews

The new EC regulatory framework requires Member States to review the main electronic communications markets by July 2003, in order to ensure that regulation remains proportionate in the light of changing market conditions.

One of the reviews looks at the market for wholesale narrowband Internet call termination, taking into account the links with the market for wholesale call origination. Oftel is reviewing the relevant call origination remedies, including FRIACO and Number Translation Services (NTS). See Oftel's Review of the wholesale unmetered narrowband Internet termination market, consultation - 17 March 2003 at

http://www.oftel.gov.uk/publications/eu_directives/2003/eu_narrow_term/index.htm

13.2 FRIACO (Flat Rate Internet Access Call Origination)

FRIACO is an unmetered wholesale product that allows other network operators to offer their own unmetered Internet access products in competition with BT. The UK was the first European country to introduce FRIACO, following a direction by Oftel in May 2000, and it has led to some of the cheapest prices for Internet access in the world. Around six and a half million UK homes now use unmetered Internet access.

There are two variants of FRIACO available. DLE FRIACO coveys Internet calls to BT's local exchanges and Single Tandem FRIACO (ST FRIACO) conveys Internet traffic to BT's main regional exchanges.

Oftel has issued a number of directions relating to FRIACO. Recent work includes introducing a requirement to allow operators to pay monthly in arrears rather than in advance (May 2002), and a review of traffic patterns leading a price reduction of approximately 8.5% for DLE FRIACO (July 2002). In the EU market reviews (March 2003), Oftel has proposed that the current restrictions on the supply of ST FRIACO be lifted from July 2003. Currently, users of ST FRIACO must bear the risk of the additional investment in capacity being ‘stranded’ before the full costs have been recovered.

Most recently, Oftel has set out its proposals for BT to cut its wholesale charges by 17 per cent because it has been charging operators for certain call routing and call management measures that Oftel believes are no longer technically necessary. See Intelligent Network (IN) Charge for DLE and ST FRIACO – 4 April 2003 http://www.oftel.gov.uk/publications/internet/2003/friaco0403.htm

13.3 Oftel's consumer guide 'How to access the Internet at home'

n September 2002, Oftel published a new guide for consumers connecting to the Internet to encourage a better understanding of what products are available in the market and to enable consumers to take advantage of market opportunities resulting from competition.

Copies of the leaflet are available from Oftel (call 020 7634 8761). The leaflet is also included in the Government's UK online information pack, free phone 0800 77 1234 Go to www.letsallgeton.gov.uk – for more about UK online.

In addition, the guide is available on Oftel's web site at http://www.oftel.gov.uk/publications/consumer/consguides/int0902.htm

13.4 Working with other Government departments

Oftel continues to contribute to the development and implementation of the Government’s UK online strategy by working with the Office of the e-Envoy and other government departments to develop and monitor implementation of the plan. Oftel provides inputs to regular and ad-hoc government requests for information on developments in Internet access and contributes to the quarterly UK online report to the Prime Minister.

  Broadband

14. Oftel's broadband strategy

In order to provide a focal point for its work on regulation in broadband markets going forward, Oftel has established a new broadband programme. The aim is to develop and apply Oftel’s strategy in relation to broadband and co-ordinate Oftel’s approach to broadband to ensure that all decisions made are coherent and contribute to Oftel’s overall aim of achieving effective competition in broadband markets.

Oftel’s broadband objectives are:

• effective and sustainable competition in the provision of broadband access and services (evidenced by no operators having significant market power in broadband markets);
• swift and firm corrective action in the event of anti-competitive practices;
• a high level of consumer awareness of the nature of broadband services and choices available; and
• a regulatory framework which is conducive to further investment in broadband and roll-out to remote areas of the country.

Oftel's broadband strategy statement is available at http://www.oftel.gov.uk/publications/broadband/other/stratb1201.htm

15. Overview of the UK broadband market

The UK has one of the most competitive marketplaces in Europe for broadband, with competition at the infrastructure level between cable providers and DSL and numerous service providers competing with BT to provide retail DSL services to customers. So as to stimulate further competition at the infrastructure level, Oftel has required BT to provide local loop unbundling, shared access and ATM interconnection. In doing so, however, we have been careful to ensure that incentives to invest in alternative infrastructure are not undermined. We are also keen to ensure that BT has an incentive to invest and innovate.

There is also some limited provision by fixed radio that, together with mobile radio and satellite technologies, should in future also be able to deliver broadband services more widely. Larger business users access broadband services via leased lines.

16. Availability

Around 67% of the UK has access to broadband via DSL and around 1 in 4 has a choice of broadband via DSL or cable modem. Broadband fixed wireless access offers broadband to around 12% of the UK and satellite, though not currently a mass-market product, has the potential to deliver broadband across the UK.

16.1 Cable modems

Cable networks pass around 50% of UK homes. ntl and Telewest are both working to upgrade their networks so that they can provide broadband services to consumers in all the areas covered by cable networks. Telewest services are available to 4.9 million homes, of which 96% are broadband capable. NTL services are available to 8.4 million homes, of which 79% are broadband capable.

At present, 43% of UK homes (around 11 million) have access to broadband via cable.

BT is planning to extend DSL availability to 90% of UK homes and businesses:

• BT's ADSL registration scheme

Since the web-based registration scheme was launched, more than 300,000 customers have recorded their interest in getting ADSL broadband. So far, 35 exchanges have been upgraded as a direct result of the scheme, and a further 179 have hit the triggers set and are now in the process of being upgraded by BT.

On 31 March a new batch of 102 exchanges where demand has been strong had triggers published for the first time. Further information about BT’s DSL rollout is available at www.bt.com/broadband

BT has said it will announce trigger levels for the next 200 or so exchanges shortly. If these, and exchanges with existing trigger levels are enabled, coverage would increase from 67% to 85%. BT will announce trigger levels for the remaining exchanges by early summer.

Central to the setting of new trigger levels is a technological development which enables exchanges to be linked together so that the costs of connecting them to BT's core network are reduced.

• Extending the reach of ADSL

BT Wholesale is testing the provision of ADSL broadband services over slightly greater distances from the exchange than at present. The distance restriction on ADSL coverage comes about because of the reduction in the strength of the signal carried due to electrical resistance in the cables. BT’s research has shown that a good quality service can still be provided when relaxing the limits on this loss in signal strength from 55dB to 60dB. This is roughly equivalent to extending the reach of broadband from 5.5km from an exchange to about 6km.

Currently about 94 per cent of people connected to an ADSL-enabled exchange can get service. BT’s changes will increase that to about 97 per cent - putting an estimated 600,000 new households in reach of quality broadband service from the proposed launch date in June 2003, subject to trials to confirm the research.

• Bypassing optical fibre

BT is also looking at people who cannot get broadband because they are connected to their exchange by optical fibre, which cannot support ADSL technology. BT's proposed solution would use copper cables to bypass the fibre. More details will be published in April 2003. The problem has typically affected households living on new housing developments built during the 1980s.

• BT's mini-DSLAMs trial ('exchange activate')

BT is trialling a new ‘community’ broadband concept at sites in England, Scotland, Wales and Northern Ireland. The trial makes use of smaller exchange equipment (known as mini DSLAMs) and the existing copper links between smaller exchanges and BT’s backbone network to offer ADSL services to as few as 16 subscribers per exchange. The trial is expected to continue until June this year.

16.3 Wireless networks (including satellite)

• Broadband fixed wireless access (BFWA)

Current broadband fixed wireless access base stations have the potential to cover around 12% of the UK. These are mainly in urban areas where line of site is needed from the base station to a customer's premises.

• Wi-Fi hot spots

Wi-Fi hotspots are based on the 802.11b standard, and allow anyone with a wireless-enabled PDA or laptop to surf the Internet and send e-mail at high speed, without having to plug into a network. Wi-Fi hotspots are being built throughout the UK and Ireland at locations such as railway stations, airports, business parks and coffee shops. Currently there are approximately 90 operational WI-Fi sites in the UK and four operators offering services, BT Openzone, Starbucks, Megabeam and UK Explorer.

• Satellite

Two-way and one-way satellite access is also available throughout the UK, offering the potential to reach those parts of the UK outside of the reach of ADSL or cable modem services.

16.4 Extending availability

Oftel’s primary focus is to meet the needs of consumers through promoting competition at all levels of the value chain. For broadband, this means effective and sustainable competition in the provision of broadband networks and services, and a regulatory framework that is conducive to further investment in broadband and rollout to remote areas of the country.

If a broadband delivery ‘gap’ were identified, Oftel would aim to assist the Government as necessary in identifying and applying any measures to meet the reasonable needs of consumers outside areas addressable through commercial means. In so doing, Oftel would aim to ensure that any measures were technologically neutral and, as far as possible, had no detrimental effect on the development of competition in general.

At present, Oftel contributes to the development and implementation of the Government’s broadband policy, working with the DTI, English RDAs and the devolved administrations to help foster a competitive and extensive broadband market. Oftel is also contributing to the work of the Broadband Stakeholders' Group (BSG), which has an important role to play in extending broadband rollout and take-up.

• UK Broadband Taskforce

The UK Broadband Taskforce was formally launched at the Building Broadband Britain conference in November 2002. The aim of the Taskforce is to bring together work focused on public sector procurement with work focused on increasing availability in the private sector, by stimulating economic development and enhancing the delivery of public services through extending broadband services at the regional and local level.

The Taskforce includes a team of regional broadband co-ordinators from DTI who will ensure that public sector broadband procurement has the maximum impact on regional economic development, and a team from OGC to provide procurement assistance.

• Broadband Stakeholders’ Group

The Broadband Stakeholder Group (BSG) is Government's key advisory group on Broadband. It provides advice on the Government strategy to meet its target for the UK to have the most extensive and competitive Broadband market in the G7 by 2005.

On 20 March 2003, the Government published its response to the BSG's second annual report http://www.broadbanduk.org/news/bsg_press_release_20_03_03.htm Oftel has taken on the following key actions:

• Oftel to continue to work with the BSG to address issues related to broadband interconnect and interoperability (rec. 6)
• Oftel to monitor Quality of Service issues on a regular basis (rec. 7)
• Oftel to consult on draft guidance for the application of the new regime for the Communications Code (rec. 12.1) See The Granting of the Electronic Communications Code by Oftel, published 2 April 2003 http://www.oftel.gov.uk/publications/Infrastructure/2003/elecode0303.htm
• Oftel to continue to keep under review whether further guidance is needed on sharing existing infrastructure (rec. 12.2)

17. Take-up

UK broadband users as at end March 2003

Source: Oftel

18. Prices (December 2002 international benchmarking survey, prices as at August 2002)

For residential broadband users:

• for DSL services only (ie cable modems excluded), UK prices are cheaper than France, similar to Germany and slightly more expensive than Sweden and the US; and
• when cable modems are included, prices in the UK are similar to the US and Germany, cheaper than in France and only in Sweden are prices lower than in the UK.

Comparison of residential broadband prices, August 2002

Source: Oftel International Benchmarking study published December 2002

For business broadband users:

• for the most basic services available to business (ie where the business has a minimum bandwidth requirement of 129kbit/s), the UK is cheaper than all other countries studied; and
• for business services where a minimum geometric mean bandwidth of 500kbit/s was required, the UK is cheaper than all other countries except the US by a minimum of 20%.

Comparison of business broadband prices, August 2002 (minimum bandwidth of 129 kbps)

Source: Oftel International Benchmarking study published December 2002

19. Current broadband products (retail and wholesale) and what Oftel is doing in these areas to promote competition

19.1 Broadband cable

Both ntl and Telewest offer high-speed Internet access over their cable networks via cable modems. Telewest charges £50 for connection, reduced to £25 for customers subscribing to Telewest's telephone and TV services as well. The standard cost of installation for new ntl customers is £75 and £50 for existing customers.

	NTL	Telewest
128 kbps	Ntl retails an entry-level cable modem service for £14.99/month offering speeds up to 128 kbps - twice as fast as a dial-up connection. From May 2003, NTL will increase the price of this service to £17.99 and increase the speed to 150 kbps.	-
500-600 kbps	Ntl charges from £24.99/month for its 600 kbps cable modem service.	Telewest's 512 kbps service costs from £25/month.
1 mbps	In March 2002, ntl launched a 1 mbps broadband service, for £49.99/month. ntl reduced this to £34.99 from 1 January 2003.	In June 2002, Telewest launched a 1mbps broadband service at £35/month.

19.2 Digital subscriber line (DSL)

DSL creates a high-speed digital connection over an existing telephone line using a pair of modems, one at the user end and the other at the local exchange. The downstream data rate of ADSL is much higher than the upstream data rate. DSL is a distance-dependant technology, which means that it is normally available to those consumers who live within 3.5km of their local exchange.

• Retail DSL services

There are over 100 ISPs offering retail services based on BT’s wholesale ADSL products (see below), including BT’s own service providers, BTOpenworld and BT Retail. Oftel estimates that they have around 50% of the retail DSL market.

Increasingly, ISPs are beginning to offer DSL services using ATM interconnection and over unbundled loops (see also below) giving them the freedom to provide innovative products e.g. with lower contention rates or symmetrical bandwidth.

• 256kbps è 2mbps and more

A number of ISPs have recently announced higher bandwidth ADSL services offering speeds of up to 1mbps and 2mbps, available to residential and business users.

• SDSL

SDSL typically appeals to small and medium sized businesses which need to both receive and transmit data at high speeds.

A number of ISPs are promoting SDSL to their business customers in areas that have SDSL coverage. These packages are based around LLU products (e.g. from Easynet and Bulldog) as well as BT Wholesale's own symmetric products which it is trialling.

BT's current trial of SDSL in 22 exchanges will be extended to 100 exchanges by May 2003, and a commercial launch of the service is scheduled for the summer.

• BT’s wholesale Asymmetric Digital Subscriber Line (ADSL) Service

BT offers a number of wholesale products, which are available to all service providers on the same terms and conditions. They are:

BT Wholesale is set to trial of two new consumer ADSL services in September 2003, with the intention of launching them commercially by the end of the year. The entry-level ADSL product will give 256kbps, and the premium service 1mbps. Prices and other details will be announced later in the summer.

• Wholesale prices (BT)

Oftel is currently investigating a complaint from a number of operators in relation to BT's latest cut in IP Stream pricing.

• Kingston's wholesale Asymmetric Digital Subscriber Line (ADSL) Service

Since 1 November 2002 Kingston Communications has offered service providers a range of wholesale products. They are:

Before the launch of these products, Kingston offered a wholesale ADSL product that could be used by service providers primarily to offer services aimed at the residential market.

• Wholesale prices (Kingston)

All Kingston's wholesale products have a £55.32 (ex VAT) connection charge with annual rental charges ranging from £231.60 to £1,122 (both ex VAT), depending on speed, contention and type of connection.

• ATM interconnection

Following Oftel's June 2002 direction requiring BT to provide interconnection to its BT's broadband network, operators now have the option of offering competing wholesale and retail services. Oftel is ensuring that prices for these new services are set at a level that encourages competition between the different providers of broadband services. As a result of the direction thus are now offering a new retail service to small businesses.

• Local Loop Unbundling (LLU)

LLU enables competing operators and service providers to create their own DSL products rather than having to buy BT’s DSL products on a wholesale basis. LLU enables other operators and service providers to install their equipment in BT's exchanges in order to offer their own broadband services to end users.

The LLU condition in BT's licence came into force on 8 August 2000. This sets out BT’s obligations and gives Oftel powers to act if problems occur. In addition, the EC Regulation on LLU came into force on 2nd January 2001. Since then, there has been an intensive programme of work by BT, other operators and Oftel to set the technical and operational framework for the LLU process. Where necessary, Oftel has taken action to resolve disputes.

There are currently over 3000 unbundled loops being used by operators and service providers to deliver a range of broadband services to end-users including, for example, SDSL and 4 mbps services.

For more information about the progress made with ADSL rollout and LLU, including current issues and upcoming developments, see Oftel's DSL factsheet at

http://www.oftel.gov.uk/publications/broadband/dsl_facts/dsl0203.htm

19.3 Leased Line Access

Leased lines are permanent high capacity telecommunications links. They are supplied by network operators to business users and are used by operators and services providers, for example, to supply backhaul for mobile networks and connections to the Internet used by Internet service providers. Leased lines may be provided at a variety of bandwidths ranging from below 2mbps to 622 mbps.

• Oftel issued its comprehensive Direction on Partial Private Circuit (PPC) prices and service level agreements on 23 December 2002. PPCs are the key wholesale components of leased lines which telecoms operators buy from BT so they can offer their own services directly to end users. The prices set by Oftel for PPCs are typically 50 per cent lower for connection and 20 per cent lower for rental than BT's previous charges. Oftel believes these charges better reflect the costs BT incur in providing these services. The amended charges have been backdated to 1 August 2001 when PPCs were first introduced by BT.

• Oftel also confirmed a number of improvements for BT to make to its service level agreement for PPCs. These improvements include BT paying compensation to other operators in the event of late delivery. This will act as an incentive for BT to provide a high quality service to other operators.

Overall, Oftel believes that these measures will allow operators to compete more effectively with BT in the retail market for leased lines.

• On 24 January 2003 Oftel published proposals to allow Vodafone to purchase