Förderverein Informationstechnik und Gesellschaft

64 kBit Internet Standleitung: EURO 80,-- / Monat?|0|RAPID&lg=EN

Leased lines: Commission acts to bring down cost of communications in Europe

DN: IP/99/873 Date: 1999-11-24

TXT: FR EN PDF: FR EN Word Processed: FR EN


Brussels, 24 November 1999

Leased lines: Commission acts to bring down cost of communications in Europe

The European Commission has adopted a Recommendation on the pricing of short-distance leased lines. The Recommendation sets price ceilings for short distance leased lines that incumbent telecommunication operators charge. Leased lines are short distance communications links that incumbent telecommunications companies rent to other network operators. These short distance circuits constitute essential building blocks for the internal communications networks of European businesses. Leased lines are increasingly used also by small and medium sized enterprises (SMEs) to have a permanent high speed access to the Internet. The sector of leased lines, data networks and business communications is becoming increasingly important in particular with the emergence of e-commerce, and already represents about 25% of the total telecommunications market in some Member States. The Recommendation also encourages unbundling of the local loop and other measures to stimulate competition in the local access networks.

"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 Mr. Erkki Liikanen, Commissioner responsible for Enterprise Policy and the Information Society. "This recommendation will be of benefit to all Internet users, and in particular to SMEs."

Leased lines can carry high volumes of voice and data and multimedia traffic. In particular Internet Service Providers rely extensively on the availability of leased lines to connect to the world-wide Internet backbone.

Competition in the leased lines market has been slow to develop, and new investment in competing communications infrastructure is concentrated in the profitable high capacity routes between big cities. Incumbent telecommunications operators remain the dominant suppliers for all types of leased lines, and especially for short distance local leased lines, where they face little competition. Consequently, prices remain high in most Member States.

The recommended price ceilings are based on the prices in the three lowest cost Member States in the EU (see annex). This approach follows a previous Commission Recommendation, that addressed the price of interconnection to switched networks, and which has been instrumental in making interconnection charges in Europe to converge and be among the most competitive in the world.

The Recommendation on leased lines interconnection sets the following price ceilings for the monthly rental of a leased transmission circuit, of length 5 km, provided by an incumbent telecommunications operator to another operator so that can competitively link a user into its backbone network. These recommended price ceilings provide guidance to the National Regulatory Authorities to assess whether the prices are cost-oriented as required by Community legislation.

64 Kilobit/s capacity circuit: 80 Euro/month (excl VAT)

2 Megabit/s capacity circuit: 350 Euro/month (excl VAT)

34 Megabit/s capacity circuit: 2600 Euro/month (excl VAT)

These price ceilings are comparable to the prices that are found in other competitive markets, like the USA.