City telecoms links being kept artificially high

The dearth of local access providers – companies that offer the ‘last mile’ connection between a carrier’s backbone and the customer’s premises – prevents international carriers from offering aggressive pricing against incumbent suppliers such as BT.

According to Margrit Sessions, managing director of telecoms pricing consultants Tarifica, the lack of competition in this market is the main barrier to lower pricing of telecoms links in UK cities.

‘Metro access is currently very expensive and carriers often end up paying more for the access than it costs them to provide the trunk network,’ she said at the UCI Global 2002 carrier show in London. ‘If there was more competition I believe we’d see a significant drop in the price of data links in metropolitan areas like London.’

However, things may be about to change with utilities companies now entering the market. London Electricity laid fibre along its electricity network and formed a company called 51 Degrees to operate the network while Thames Water has run fibre through its sewer infrastructure and partnered with telecoms operator 186K to form Urband.

‘It’s a huge bottleneck in the telecoms market,’ said Helen Simpson, marketing programme manager for 51 Degrees, the local access provider formed last December by London Electricity.

‘There’s a lot of capacity on the backbone of international routes worldwide. The situation that exists is that BT has had that monopoly for a long time – it’s the local loop unbundling issue – so international carriers are looking for other people to turn to.

‘Greater competition in the local loop can only be a good thing from a customer’s point of view. Our service will facilitate that market opening up along with obviously Oftel pressure for BT to open up the local loop.’

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