The UK leased line market gets a shot in the arm on Thursday as Oftel forced BT (quote: BT) to cut prices on its leased lines.
Leased lines are used by businesses to provide permanently connected voice and data links. The UK market alone is estimated to be worth £1.5bn a year. While businesses can buy services directly from BT or from other telcos, operators that wish to resell BT's service have to pay the same retail price paid by BT's business customers. Now Oftel has decided BT must negotiate a lower, wholesale price with operators.
BT has two months to sort out a new pricing structure and another month and a half after that to get the product ready to buy. Oftel is convinced the move will increase competition.
"The successful outcome of negotiations will significantly increase choice and competition for the provision of leased lines, which are used by businesses to provide dedicated telecommunications services," said director general of Oftel David Edmonds.
One of the operators to benefit from the price reduction is Energis (quote: EGS). According to regulatory manager Andrea Dworak, the telco will be looking for a "radical reduction" in the pricings of leased lines services. "There are lots of different products so it is difficult to give a figure but we would want to see a 50 percent reduction," she said.
She believes Oftel's decision to force BT's hand will make a huge difference. "Currently BT has a distinct competitive advantage as it can provide services more cheaply. This will change the competitive landscape," she added.
However Dworak is not particularly impressed with Oftel's timing. "We have been campaigning since beginning of last year and would have liked to see it progress a lot faster."
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It is unthinkable that BT might go bust. But Guy Kewney says if you want to see a precedent for the problems facing the corporation, look back at the way the BBC has lost its technology leadership role in the last twenty years. Go to AnchorDesk UK for the news comment.