Oftel has begun a fresh investigation into the cost of leased lines, after users rejected its last set of findings. It says the review may force BT to lower its prices.
The telecoms watchdog will publish its latest findings next month. These will compare UK leased line prices to those in the US and the rest of Europe, and will assess the coming impact of new technologies such as asymmetric digital subscriber lines (ADSL).
Oftel director general David Edmonds admitted that Oftel's last look at the subject in January - which concluded that prices in the UK are not significantly higher those in the major European countries - was not well received by users.
An Oftel spokesman said: "There's a perception that leased lines are more expensive here than anywhere else. We're making sure we know what the reality is - we need to have a clear understanding before we decide if there is a need for regulation."
According to Oftel, in 1997/8 BT had 88 per cent of the £1 billion UK leased line market. Cable & Wireless Communications had just nine per cent.
The Telecommunications Managers Association has campaigned for price cuts. Director general David Harrington said: "Its pretty clear that no one outside of BT has a grasp of the size and shape of the leased line market - we'd like to see an accurate cost model so we can be certain that prices are cost based."
EU regulations designed to stimulate competition require companies with significant market share, such as BT, to base prices on costs, but Harrington said: "We believe that prices are market based rather than cost based, and we'd like to see leased line prices down to match those in the US."
Yankee Group Europe senior analyst Susen Sarkar said: "It wouldn't be extravagant to say UK leased lines cost 10 times the price of those in the US."
Sarkar said there is virtually no competition in the UK market, because new entrants can set their prices slightly lower than BT's and still make large profits.
A BT spokesman said: "We believe our prices always give good value for money."
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