UK telecoms watchdog Oftel is to regulate the prices BT can charge for permanent voice and data links, after it concluded that the telco's tariffs for the service are too high.
According to Oftel, BT's pricing for leased lines, which are used to carry permanent telecom links for high volumes of voice and data, is too expensive and higher than in other countries such as the US.
The retail service is purchased by many UK business consumers to connect two premises, while leased lines purchased as a wholesale service enable operators and service providers to offer other telecom services such as fixed line internet access.
According to Oftel, the £1.4bn retail leased line market lacks effective competition. It said international comparisons of leased line costs show that BT's prices are significantly higher than the cheapest countries in Europe. The watchdog also claims the UK's position in the market has "eroded in recent years".
Anne Lambert, director of operations at Oftel, said: "The UK leased line market has been an area of concern. We don't think there is effective competition in the retail market or at the wholesale level. We need to look at BT's pricing structure for an effective competitive market."
There is no current price regulation for wholesale leased lines, and Oftel has warned that it intends to set and control BT's prices in order to encourage greater competition.
David Edmonds, director general of telecommunications at the watchdog, said: "Oftel's analysis shows that the main problem lies in the wholesale market. Subject to this consultation, I consider that targeted price regulation of a wholesale leased line service to be provided by BT is likely to be the most appropriate regulatory action."
BT said that while it welcomes the investigation by Oftel, it has concerns about some aspects of the analysis. "We have co-operated fully with Oftel and will continue to do so. We have some concern over certain conclusions and will play a part in the consultation process," said a spokesman.
"We believe our prices are genuinely competitive with the rest of Europe. We are not convinced that some of Oftel's proposals will benefit customers and be in their long term interests," he added.
Oftel's proposals are part of a consultation document issued yesterday, following a review of competition in the market for national leased lines. The consultation will run until November.
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