1. Partial Private Circuits Kalpesh Brahmbhatt 31 October 02

2. 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 DMSULocal exchange BT core network Trunk Segment Terminating segment End to end leased line

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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.

11. 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