BT's leased line prices are up to three times higher than they should be, the European Commission said today, prompting Oftel to launch another consultation around prices.
Brussels today adopted a recommendation that ceilings should be placed on the charges made by incumbent operators across Europe - BT in the UK. All BT's 5km leased line prices are well above the ceilings.
"The high price of leased lines in Europe has been detrimental to the competitiveness of European companies and has hampered the spread of the Internet in Europe," said commissioner Erkki Liikanen.
For a 64Kbps capacity 5km circuit, the EC recommends a ceiling of 80 euros per month (excluding Vat). According to the EC's figures, in October BT's price for the same circuit was over 250 euros per month.
BT argues that the EC's figures don't take into account factors like discounts, exchange rate fluctuation and inflation. "We feel competition in the marketplace is already making it a competitive market for leased lines in the UK," said a BT spokesman.
But while BT wouldn't say whether prices would fall as a result of the recommendation, telecoms watchdog Oftel said it would publish a consultation document by the end of the month, "in light of the information coming out today," said an Oftel spokeswoman.
This could lead to a turnaround from Oftel's position earlier this year when it let BT off the hook after a year-long investigation into leased line prices, concluding that BT's prices were not significantly higher than the rest of Europe.
Bill Mieran, executive chairman of the Telecom Users Association, welcomed the news. "We expect Oftel to pick this up and run with it as soon as possible," he said.
BT says the prices are at a level needed to cover its costs. Mieran said these costs need investigating. "What has never been challenged is whether these costs are ever justified. They're going to have difficulty justifying them at those prices," said Mieran.
The EC's other price ceilings are 350 euros per month for a 2Mbps circuit (compared to BT's 600 euros) and 2600 euros for a 34Mbps circuit (compared to BT's 6000 euros).
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