Many businesses today could not function without effective telecommunications services. At the heart of these services are high-performance leased lines that carry voice and data traffic from the company’s offices to the outside world.
Leased lines were once very expensive and beyond the means of all but the largest companies. Prices have come down and leased lines are now becoming attractive to smaller companies. It is surprising that the prices have come down because there is little competition and BT dominates the market. One reason for the price reduction is that cheap DSL technologies have reduced the perceived value of digital leased lines. In addition, because of BT’s dominance, Ofcom has regulated the market.
Ofcom last reviewed the market in 2003/4. The review resulted in price controls being imposed on certain types of line. For example, increases in the prices of low bandwidth lines were limited to the retail price index (RPI) minus 4 per cent. This meant that the prices dropped each year.
Ofcom has been working on another study of the market and has just published its preliminary conclusions. Competition has improved in some areas through the emergence of new trunk networks and local loop unbundling, but in some newer areas BT has increased its market share.
Since the last review, Ethernet-based access services have grown rapidly. Some stakeholders have told Ofcom that BT’s Ethernet offerings are over-priced and Ofcom now thinks that price controls should be applied to them.
Ofcom is asking for the views of the public on the future of price controls in many parts of the leased line area; it’s worth taking a look at Ofcom’s reasoning and making comments.
One new topic that has cropped up in the review is the vexed issue of dark fibre. Many companies and network operators have asked for services where they have direct access to both ends of a piece of fibre-optic cable without having to use whatever speeds and electronic protocols are offered by BT. This is analogous to local loop unbundling, but for fibre instead of copper. There has, understandably, been some resistance from BT to offer such services.
Ofcom believes it has the power to require BT to provide dark fibre services and is asking for views on what should be done.
The use of fibre in the access network is critical for future, high-bandwidth services. The ability to use dark fibre brings more competition to the market and will help to bring forward the launch of new services.
