Is the Cost of Leased Lines is Likely to Fall? on YooZoom
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Is the Cost of Leased Lines is Likely to Fall?
A More Competitive Market
As one of the UK’s premier providers of Leased Lines, we obviously follow industry regulation very closely, and hence we are particularly interested in the latest Ofcom proposals regarding business broadband prices.
On June 12th Ofcom proposed controls on the wholesale prices BT charges for products using leased lines, which provide important links for businesses and providers of superfast broadband and mobile services.
hat BT has ‘significant market power’ in a number of wholesale leased line markets, and that ‘charge controls’ should be imposed to protect buyers of these products.
Ofcom is today consulting on the proposed level of those controls, which would apply to some of BT’s wholesale leased line prices. The new controls should lead to significant real-terms price reductions for most customers of the £2bn leased lines market, such as businesses, schools, universities and libraries.
Consumer mobile and broadband operators, which use leased lines to transfer data on their networks, would also see savings which could be passed on to customers.
Ofcom is proposing a form of charge control that aims to bring prices down to costs over a three-year period. This type of control, which is linked to inflation based on the consumer price index (CPI), provides an incentive for BT to make efficiency gains.
The main charge controls relate to two groups of services – or ‘baskets’ – provided by BT. These are older leased lines using ‘traditional interface’ technology, and newer lines based on the faster ‘Ethernet’ standard for sending data at very high speeds over networks.
For BT’s traditional interface services with bandwidths up to and including 8Mbit/s, Ofcom is proposing an overall basket cap of between CPI – 6.25% and CPI – 14.25%, with a central estimate of CPI – 12.25%. This will mean prices will come down using those formulas each year, for three years from April 2016.
For BT’s Ethernet services with bandwidths up to and including 1Gbit/s, Ofcom is proposing an overall basket cap of between CPI – 9.75% and CPI – 17.75%, with a central estimate of CPI – 13.75%. Again, prices will come down using those formulas each year, for three years from April 2016.
Dark fibre
Ofcom also proposed that companies providing leased lines should be granted access to BT’s networks through a process known as ‘dark fibre’.
This would involve BT giving competitors physical access to its fibre-optic cables, allowing them to take direct control of the connection. The service is referred to as dark fibre because the fibre-optic cables would not be ‘lit’ using BT’s electronic equipment. Instead, they would be ‘lit’ by the competitor installing its own equipment at either end of the cable.
Ofcom proposed that the price of dark fibre access should be based on BT’s existing 1Gbit/s Ethernet products, for which BT provides the electronics, minus the cost of those electronics. Today’s consultation provides guidance on how Ofcom would expect those costs to be calculated. The Ethernet caps above assume that BT would be required to provide dark fibre access, and take account of its cost in doing so.
All of the above proposals should lead to one thing, and that is a more competitive market place and a better deal for business, and as usual Yoozoom aim to be at the forefront of this ever growing market.
If you are interested in getting your own superfast leased line, you can send us a message below, or call us on 0800 0149 800 to speak to our specialist team.
