Operators hail Oftel's push for cheaper leased lines

Proposals published by Oftel on Tuesday, which could drive down the prices businesses pay for leased lines, have already been welcomed by one telco that offers leased lines to UK businesses.

Thus has claimed that Oftel's move is evidence that BT has been overcharging for its wholesale leased line products and has been acting in an anti-competitive manner.

BT is likely to oppose Oftel's decision and has already claimed that some of the regulator's proposals are flawed.

Following an investigation of BT's wholesale leased line products, Oftel is proposing that BT halves its connection charges for partial private circuits (PPCs) -- which are used to build networks for businesses. Oftel also proposes 30 percent cuts to the rental charge for PPCs.

"This move is designed to bring down prices significantly for end users and operators by boosting competition in the leased line market," said Oftel in a statement. Oftel is also proposing that the move should be backdated to 1 August, 2001 -- when BT first introduced the products.

Thus, which buys BT's wholesale leased line product and resells it to business customers, is understandably pleased by Oftel's ruling -- which it claims is proof that BT needs to be regulated more firmly.

"When the regulator finds evidence supporting a reduction in connection charges for PPCs of 50 percent, and rental charges by 30 percent, it is clear that the UK market is not ready for a relaxation in the regulatory regime. If anything the regulator's arm ought to be strengthened," said Phil Male, chief operating officer at Thus.

"Thus will be responding in detail to the proposals in due course and will watch with interest BT's own reaction. We encourage the regulator to bring the consultation period to a speedy conclusion without any watering down of the proposals," Male added.

A BT spokesman told ZDNet UK News that the company will examine Oftel's proposal over the coming weeks before it makes a formal response, but it is clear that BT is not happy about the decision.

"We think that some of the price cuts are unnecessary, and are based on an incorrect understanding of BT's costs. We believe that leased line prices in Britain are already the lowest in Europe," said the BT spokesman, adding that BT's leased line business generates revenue of around £100m per year.

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