National leased lines: effective competition review and policy options 7 September Heather Clayton.

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Presentation transcript:

National leased lines: effective competition review and policy options 7 September Heather Clayton

Effective competition review National Leased lines Review announced in November 1999 – in response to concerns of users and OLOs and – in line with OFTEL’s new strategy Publication of consultation document August 2000 End of consultation period: 27 October 2000 – plus 2 weeks for comments on comments Joint OFTEL policy / compliance project Team: Tim Cross, Priya Sinha, Heather Clayton, David Black: contact details in the consultation document

Terminology Customer site 1 Customer site 2 Telecoms network End to end leased line - BT’s pricing components - Local endMain linkLocal end Terminating segment Trunk segment Terminating segment Wholesale economic markets for leased lines Serving centre for LL at the Local exchange Serving centre for LL at the Local exchange Serving centre for LL at the DMSU Serving centre for LL at the DMSU

Effective competition review Form of effective competition reviews set out in OFTEL’s recently published guidelines Benchmarking – are consumers getting the “best deal” Market analysis – Retail and wholesale: market structure, market shares, entry barriers, price trends, profitability, consumer behaviour Policy Options – supported by a cost-benefit analysis

the market for retail leased lines is not effectively competitive the market for wholesale trunk segments is prospectively competitive the market for wholesale terminating segments is not effectively competitive the market for retail leased lines will not become effectively competitive unless the problems at the wholesale level are addressed  Solution:  BT should offer appropriately priced wholesale terminating segments Conclusions for consultation

Policy proposals Wholesale products and prices – 1) to encourage commercial negotiations between OLOs and BT, within the framework of the ICD – 2) OFTEL, on its own initiative, specify the services that BT should offer – 3) OFTEL should also control the price of BT’s wholesale services Retail products and prices – 4) Binding controls on retail prices – 5) Safeguard controls on retail prices

Information requested from operators Market analysis including barriers to entry and reliance on BT Appropriate products and migration to new arrangements Impact of the proposals

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