Leased lIne prices in Europe:
Carriers claim urgent need for leased line regulation
The average monthly price of a 2-Mbps circuit within a country in the EU is 3,500 euros, compared to 750 euros in the U.S., said Sutherland. Cross-border circuits in the EU cost on average E4,800 per month. And "costs vary greatly and inexplicably between member states." He points to Italy and Spain as particularly pricey, with leased line prices of around E6,000 per month.
According to WorldCom's figures, the "best practice" in Europe for wholesale leased line pricing is Sweden. Ireland's prices are 4.5 times the Swedish level, and even the new U.K. direction on wholesale leased lines will result in prices 2.5 times the Swedish level if all elements are included, claimed Lane. (U.K. prices are currently four times Swedish levels).
The new U.K. prices are "superficially attractive, 15% below the Commission recommendation," said Lane, but do not include the "relatively high upfront charges." He also points to the lack of a broad range of products and weaker SLAs than for the retail offer.
Total Telecom - 23 November 2001
The current regulation of wholesale leased line provision in Europe is "having a serious result on the degree of competition in the market and our ability to enter markets and compete effectively," according to Barney Lane, director of EMEA interconnection policy at WorldCom.
He was speaking at the Liberalization and Regulation of European Telecoms 2001 conference organized by trade association ECTA in Brussels this week. WorldCom was one of the signatories of an open letter sent to EU Commissioners on Wednesday complaining about leased line regulation.
"We are looking to the Commission to use whatever methods it can," Lane told Total Telecom.
The signatories are asking for "clarification that dominant operators must implement cost-orientation [in pricing]," Lane said. They ask that the national regulatory authorities (NRAs) "must take close interest and listen to carriers" on issues of technical restrictions, SLAs, pricing and capex requirements. In addition, "the Commission should publish meaningful benchmarks on leased lines," and treat leased line interconnection in the same way as PSTN interconnection.
They are demanding action in advance of the new draft directive for telecoms that is currently being discussed by EU institutions. If, as it is hoped, the new directive is passed by the European Parliament by the end of this year, it will not become law in the member states until late 2003.
"There is not the will to wait till 2004," Anne LaFrance, WorldCom's chief international counsel, told the ECTA conference. "It may be too late for a lot of companies existing in the market today."
The carriers claim that, though existing European regulation deals satisfactorily with the leased line problem, it is not implemented at member state level. "Our findings are very much in line with what was said," said a spokeswoman for the Competition directorate general at the European Commission. "Not all regulators have the legal powers to act."
"Leased lines has become a prisoner of fortune" because there has been "so much political impetus behind local loop unbundling," said Peter Alexiadis, a Brussels-based partner at law firm Squire Sanders. People "forget it was the fundamental building block behind every operator's business."
Alexiadis points to "enforcement gaps between what is on the statute books and what is happening in practice." He said it was "naive to suppose regulators can restrict anti-competitive behavior that is strategic in nature."
Average prices
Ewan Sutherland, executive director of users' group INTUG, said U.S. prices are significantly lower than Europe, and falling faster. There are also signs that "Latin America is creeping ahead of the EU," making itself more attractive to businesses in the process.
The average monthly price of a 2-Mbps circuit within a country in the EU is 3,500 euros, compared to 750 euros in the U.S., said Sutherland. Cross-border circuits in the EU cost on average E4,800 per month. And "costs vary greatly and inexplicably between member states." He points to Italy and Spain as particularly pricey, with leased line prices of around E6,000 per month.
According to WorldCom's figures, the "best practice" in Europe for wholesale leased line pricing is Sweden. Ireland's prices are 4.5 times the Swedish level, and even the new U.K. direction on wholesale leased lines will result in prices 2.5 times the Swedish level if all elements are included, claimed Lane. (U.K. prices are currently four times Swedish levels).
The new U.K. prices are "superficially attractive, 15% below the Commission recommendation," said Lane, but do not include the "relatively high upfront charges." He also points to the lack of a broad range of products and weaker SLAs than for the retail offer.
In response to these comments, Anne Lambert, deputy director general of U.K. regulator Oftel, said she expects to see "a lot more use" of SLAs. She pointed to the experience of writing SLAs that Oftel gained in the fraught local loop unbundling process: "I rather think that experience is going to be put to good use."
Provisioning delays
The operators are also complaining about the long periods taken by incumbents to provision leased lines for their competitors. In this field, said Lane, Belgium has made a dramatic improvement to become the best in Europe. The Netherlands has also improved, whereas Germany has seen a "catastrophic deterioration," with provisioning times nearly three times Belgian levels.
WorldCom's recommendation on this issue is to force incumbents to report to NRAs distinguishing between their performance with regard to end-users and to other carriers.
Lane told Total Telecom he thought the German regulator, RegTP, did not fully understand the problem. Annegret Groebel, co-ordinator of international bodies at RegTP, said the regulator has "already set up reporting obligations on Deutsche Telekom regarding provisioning times," and was monitoring it very closely.
RegTP in August ruled against the incumbent following a complaint from competitive carrier Riodata. Groebel said a further complaint pending from WorldCom will be an excuse to delve into the issue again. If RegTP feels that "the Riodata decision is not going far enough, we have the possibility now with the complaint to look at it again." |
