Partial Private Circuits

Kalpesh Brahmbhatt

31 October 02

What are Leased Lines•Leased Lines are used to provide:

– data/voice/Internet connections for businesses

– backbone for mobile networks

– ISP connections to the Internet

•UK leased lines market worth £ 1.3bn (99/00)• An end to end Leased Line compromises of a Trunk & Two Terminating Segments

DMSU Local exchange BT core network

Trunk SegmentTerminating segment

Terminating segment

End to end leased line

Competition Analysis

• Effective Competition review in 2000:

• Competition in prospect at the trunk level

• identified problems in market for terminating segments

• Solution - Partial Private Circuits - provided on cost oriented & non discriminatory T&Cs

Solution

• Partial Private Circuits/ or Part leased lines

End to end leased line

Customer 1

Customer 2

Logical & Physical linking of networks at a point of interconnection

BT’s network providing partial private circuit

OLOs network completing leased line

PPC history

• March 2001- Oftel required BT to negotiate provision of PPCs with 10 operators

• 14 weeks for BT & OLOs to conclude negotiations

• BT launched PPCs 1 August 2001

• 2nd August - received requests for determination from OLOs

PPC history (cont.)

• OLOs migrated approx 40,000 retail circuits to PPCs since launch of product

• 7,000 new PPCs purchased by OLOs• OLOs requested Oftel to determine cost

oriented prices• robust SLA’s• Migration procedures

Phase 1 • Phase 1 Direction - issued 14 June 2002• Mainly dealt with stand alone contractual and technical

issues which were hindering PPC take up.• Included market analysis for leased lines market. • BT has market power Terminating segments• Trunk segments prospectively competitive• More detailed issues on pricing and service levels

deferred to Phase 2

Phase 2

• 10 September 02 Oftel published phase 2 consultation document.

• Main proposals:• connection charges for PPCs will be

reduced typically by 50% and rental charges by 30%.

• reduced charges for migrating retail leased lines to PPCs

Phase 2 (cont)

• savings will be backdated to 1 August 2001, when the products were first introduced by BT

• comprehensive service level agreements - ensuring OLOs provided with same provisioning and repair times as BT retail

• new regime for forecasting penalties

Phase 2 - next steps

• Consultation closed on 8 October. • Final Direction to be issued November 02.• Currently assessing responses. • OLOs broadly supportive. • BT has concerns at calculation of charges

and extent of SLA.

• To address competition concerns in market for terminating segments by encouraging take up of PPCs

• PPC Phase 1 - set out our market analysis - target competition concerns.

• Phase 2 - Applying proportionate regulation to remove obstacles which prohibit OLOs taking up PPCs -e.g. Costs reductions & effective SLAs

• PPCs enable OLOs to compete with BT at Retail level

PPCs - Oftel’s aims