High leased line costs hit European businesses

European businesses are being hampered by the prohibitively high cost of leased line connections between European countries, according to a new report.

Research by London based Phillips Tarifica shows that, despite price cuts by major European telecomms operators, and the arrival of several new carriers, leased line connections between European countries remain too high.

While there is growing demand among small and medium-sized businesses for high bandwidth links between their European offices, choice of carriers is limited on all but the most popular routes, according to the report that will be published next month.

European businesses are finding it more economical to create telecomms links with US companies, according to the report, because of the prohibitive cost of intra-European connections.

Major carriers, such as BT and Telecom Eireann, have already cut their leased line prices by up to 50 per cent, but this is not enough, according to Philips Tarifica's managing director Margrit Sessions.

"The EC benchmark states that international circuits should not be more than 30 per cent more expensive than national links," said Sessions. "This guideline is not being adhered to and leased line prices across Europe are still much too high."

Pricing for a 400 kilometres, 64Kbps leased line within the UK is around #510 per month, and in France, approximately #493 per month, according to Philips Tarifica data. However, a 64Kbps line between London and Paris - approximately 400 kilometres - costs four times as much, around #1,868 per month.

"There is room to cut prices further and once alternative carriers can offer real end-to-end circuits across the whole of Europe, prices will fall further," she said.

New operators, such as Carrier 1, Esprit and Viatel, are building high bandwidth connections between major European cities. But this is only generating competition on the major routes, according to Sessions. "For business located outside the main city, there is no choice of carriers," she said.

However, this situatuation is going to change, according to Carrier 1. "At this exact moment in time it is reasonable accurate to say that," said Linda Clark, voice products manager at Carrier 1. "But it is our intention to build a European network that offers true competition and will extend beyond major cities."

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