Cheaper leased lines will damage competition, says BT

As Oftel gets tough on BT, the telco claims its plans will actually damage the UK Internet industry

BT hits back at Oftel's pledge to reduce the cost of leasing lines from the telco claiming it will do more harm than good to the UK telecoms market.

Oftel's review of competition in the leased lines market -- in which operators and companies lease voice and data lines from BT -- has found that prices in the UK are "significantly higher" than in the US. Oftel claims competition is not effective in this market and warns that the high wholesale cost is being passed on to the consumer, both for voice and Internet calls.

The telecoms watchdog believes it should set a price for leased lines and has put its findings out for industry consultation. Its research has left BT fuming. "We have concerns about Oftel's conclusions. It is difficult to make comparisons between countries and can be very misleading," says a BT spokeswoman.

BT claims reducing the wholesale price of leasing lines will actually damage competition as it will mean rival operators will not build their own infrastructure. "It is all well and good for others to want to use our network but we have invested a lot of money into it. Effective competition will come about when other operators offer services using their own infrastructure," says a spokeswoman, accusing Oftel of "undermining competition in the network infrastructure market".

Leased lines -- traditionally used by large businesses to provide permanent phone connections -- are increasingly being used by service providers for consumer Internet access. Just last week BT offered rival telco WorldCom a deal partially based on Friaco (its wholesale unmetered product) and partially based on leased lines as a solution to the dilemma of flat-rate Internet access which many operators are struggling to maintain under BT's current charging regime. Oftel has come under increasing pressure from industry, following the collapse of several unmetered ISPs, to find a quick fix to the unmetered fiasco.

AOL, one of BT's loudest critics in the unmetered debate, believes the telco's latest claims are "disingenuous". "It is thoroughly disingenuous of BT to say other operators must build their own infrastructure," says an AOL spokesman. "The fact is that 85 percent of houses are connected to BT's copper and other operators are physically not able to get into their exchanges until they get the front door keys when the local loop is unbundled."

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