Sep, 2001 : Ebone Demands Governments Stop Leased Line Abuse

📅 September 6, 2001 - Ebone (ebone.com) is demanding thatEuropean governments and national telecommunicationsregulators act immediately to end abuses by incumbenttelecommunications companies in the overpricing, poorservice quality and unacceptably slow delivery timesof the local broadband connections that Europeanbusinesses say are vital to their growth andcompetitiveness.

A detailed research report published this week by theYankee Group (yankeegroup.com) and commissioned by Ebone, one of Europe's leading broadband networkoperators, shows that European businesses arecurtailing their adoption of key business tools suchas Internet access, e-commerce, internal intranets andvideo streaming because one of their key buildingblocks -- short-distance leased lines, i.e. the localconnections that businesses require to accessbroadband networks and services -- are too expensiveand take too long to deliver. For most businesses,short-distance leased lines are the only availablebroadband access technology and the incumbent operatoris the only available provider of this keyinfrastructure, according to the research. The problemhas been exacerbated by inaction until now bytelecommunications regulators and governmentministries in enforcing long-standing European andnational legislation to liberalise this market.
According to the report, entitled "Leased Lines inEurope: Too Little, Too Late?": "Leased lines suppliedby incumbent telcos are the workhorse of the neweconomy. For most corporate users, and for manycompetitive telcos, carriers, ISPs and serviceproviders, short distance leased lines are usually theonly broadband access technology that can be reliablyused for key corporate applications ... yet regulatorshave largely neglected short distance lease lines,preferring to focus on technologies such as DSL whichare aimed at consumers and only the smallestbusinesses. We believe this is a mistake."
The research concludes with urgent recommendations foraction by national governments and regulatoryauthorities and relevant EU institutions to end thisdamaging "broadband bottleneck".
A copy of the report has now been sent to regulatorsand key ministers in most European countries, as wellas key decision makers at the EU. In accompanyingletters signed by Ebone CEO Duncan Lewis, Ebone callson governments and regulators to review the situationurgently as it has effectively derailed "eEurope".This initiative, agreed by heads of government at amajor summit in Portugal in June 2000, is designed topromote economic growth and greater long-termcompetitiveness through, amongst other things, greateruptake of broadband, Internet / IP and e-commerceservices by European businesses.
Specifically, Ebone is calling on national regulatoryauthorities to take immediate action to implement:
Cost-oriented pricing for retail leased linesprovided by incumbents (in line with the EU's 1992 ONPLeased Lines directive)A separate "cost-oriented" wholesale price forthe leased lines "interconnection" services thatincumbent telcos must provide to competitive telcos.These must be published in "reference interconnect"offers in each country (in line with the EU's 1997 ONPInterconnect Directive to enable fair competition)Where appropriate, action by governmentsensuring that national regulatory authorities takeguidance from specific EU recommended price ceilingsfor partial leased lines. These were published inNovember 1999 as an interim step pending further costanalysisAction to ensure that incumbents offer adequateservice level agreements guaranteeing reasonabledelivery times
The report also includes the following key findings:
Local leased line are seen as the only viableway for most large enterprises to connect to broadbandnetworks and build Internet and intranet-basedapplicationsThe lack of competition in the local leased linemarket is threatening the prosperity of Europeanbusinesses. Companies surveyed said high costs andslow delivery make it difficult to get new offices upand runningOn average, European businesses are paying up to75 times more on a per kilometre basis for localbroadband access via leased lines than for equivalentbroadband services internationallyDelivery times are actually lengthening beyondacceptable levelsUS businesses benefit from between three to sixtimes as much bandwidth. But higher prices in Europemean greater network congestion and fewer applicationsand e-Business services being adopted
Camille Mendler, director of the convergentcommunications Europe research practice at the YankeeGroup, said: "Local leased lines remain the workhorseof the new economy and unless relevant issues areaddressed quickly and effectively, businesses acrossEurope will continue to suffer. This can have seriousknock-on effects on competitiveness and growth."
The action by Ebone is the latest move in thecompany's campaign to address lack of competition inthe local leased line market. In May 2001, Eboneissued The Broadband Charter based on initial findingsfrom the Yankee Group's research to highlight theproblem and its impact on business.
The Yankee Group's The European Broadband Report Card,which highlights the extent to which Europeanbusinesses fail to realise the many benefits ofbroadband technologies, reveals that no country scoresmore than 2.1 of 5 (1 = very poor and 5 = excellent).
The report card compares each country's performance tothe rest of Europe and analyses eight indicators tocome up with an overall country score. The Europeanaverage score is 1.6.