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Leased line prices to fall from April 2016

Businesses around the UK could benefit from inflation-linked price caps on leased line wholesale charges from April 2016

Telecoms regulator Ofcom has proposed a new series of controls on the wholesale prices charged by BT for leased line services, high-speed links for large businesses and network owners that will bring prices down to cost over the next three years.

Following its Business Connectivity Market Review, the regulator said BT had “significant market power” in the £2bn wholesale leased line markets, and that businesses needed additional protection as a result.

Ofcom has launched a consultation on the proposed level of the controls it will enforce on some of BT’s wholesale leased line prices.

It said the new controls should lead to significant price reductions for leased line customers across both the private and public sectors.

It added that operators of consumer mobile and broadband services, which use BT leased lines to transfer data on their networks, could also see some savings.

The new controls will be linked to inflation based on the consumer price index (CPI), which Ofcom said would incentivise BT to make efficiency improvements.

The two products that will see increased regulation are older leased lines using traditional interface technology, and newer Ethernet leased lines.

For the traditional interface services with bandwidth up to and including 8Mbps, Ofcom has proposed a basket cap of between 6.25% and 14.25% of CPI. For Ethernet services with bandwidth up to and including 1Gbps, the basket cap will be set at 9.75% to 17.75% of CPI. It will enforce the caps for three years from April 2016.

Ofcom’s review had also looked at whether BT should be made to open up its unused dark fibre network to companies providing leased lines, giving them physical access to BT’s fibre estate and direct control of the connection, meaning the fibre would be lit not by BT, but by the competitor’s equipment.

The regulator’s proposal over dark fibre is that access should be based on BT’s existing 1Gbps Ethernet product, for which BT provides the electronics, minus the cost of those electronics. The Ethernet caps, as detailed above, were worked out based on the assumption that BT would be made to open its dark fibre network.

Ofcom added that it would not force BT to open up its dark fibre in central London, including the Docklands, because that area already has sufficient competition for it to be unnecessary, or in Hull, where leased lines are provided by local incumbent Kcom.

Ofcom has now opened up a consultation, inviting comment and input on its proposals, which will run until the end of July. It hopes to publish its final statement on the matter early in 2016.

The latest news caps off a busy few days for Ofcom. CEO Sharon White told a Which? conference that Ofcom would beef up consumer's rights to switch broadband provider if their speed fell consistently and irreparably below the minimum advertised speed. New rules to make the process of switching service providers easier are also due to come into force on 20 June.

Separately, Ofcom announced it will designate the three-digit 105 telephone number as an emergency means tor consumers to contact their electricity supplier about a power cut or safety concern. This had been requested by the Energy Networks Association and will go live in April 2016, with the service to be managed and run by Vodafone.

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