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Ofcom consults on lower pricing for BT leased lines
Friday 12 June 2015 10:08:13 by Andrew Ferguson

Ofcom has opened a consultation on lower pricing for business leased lines, specifically traditional up to 8 Mbps leased lines and the more current Ethernet services at speeds of up to 1 Gbps.

  • 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.
Ofcom proposals for business fibre

The price changes do not apply to central London (including Docklands and City of London) or the Hull area. The central part of London is excluded as there is sufficient competition, though it there are questions to be raised about whether other cities, particularly those where Virgin Media, City Fibre and other leased line providers operate could also be included, hence the consultation so firms can make a case for BT prices to be kept higher in some areas.

For the mobile operators and other businesses lower Ethernet backhaul costs will be very welcome, especially at a time when data usage is climbing rapidly but revenue from customers is often remaining flat.

The proposals on dark fibre are that BT be forced to make dark fibre to be available at the cost of a Gigabit Ethernet circuit minus the cost of the optical hardware that lights the fibre. This may seem a small change, but it gives those renting the dark fibre freedom to run 1Gbps or 10 Gbps or faster over the fibre for no difference in cost beyond their own hardware. Potentially this may also open up another route for FTTH operators to get access to affordable backhaul making more areas commercially viable.

The Connected Cities voucher scheme shows the amount of competition that does exist for business connectivity with the £3,000 voucher scheme doing a lot to increase the visibility of alternatives like roof top microwave backhaul lines in cities, thus avoiding the cost and time of road works to install fibre. This competition means that we are sure Ofcom will get lots of responses to the consultation that closes on 31st July 2015.

One aspect that Ofcom needs to wary of is BT simply making up the loss of revenue by increased costs elsewhere, the functional separation of Openreach has resulted in lots more charging for 'fault' visits than used to be the case for example.

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