International Leased Lines Pricing Review 2008 - Summary of Decision

The Malta Communications Authority (MCA) has published a decision on its pricing review of international leased lines. With this decision the MCA is concluding the review and consultation process on GO's leased lines prices which was conducted throughout 2007 and the first half of 2008.

What are Leased Lines?

A leased line is a communication link that has been leased for private use, that is, a dedicated line. These are used to connect two geographically remote areas together. These links can be used to connect two local locations (local leased lines), for example, companies rent leased lines to interconnect different locations in their organisation or branch offices, or to link to a foreign destination point (international leased lines).

Why is this review required?

This review of international leased lines prices is expected to yield considerable benefits to end user as it was designed to address three main principles aimed at balancing the incentive for more infrastructure competition and investment, with the immediate benefits to both wholesale and retail end-users.

These principles include:

• greater service flexibility;
• higher-capacity offerings; and
• lower prices based on the principle of cost-orientation.

The MCA's decision features two new international leased line services, namely the:

• 34 Mbps; and
• 155 Mbps (STM-1) connections.

Whilst these are aimed at satisfying the growing demand for high capacity, interested parties may approach GO to discuss any technically-feasible wholesale demands for connectivity of higher capacity services.

What are the new prices?

On the pricing front, the review generally features lower prices, particularly for high capacity offerings. The MCA estimates that on average the price reductions amount to just over 40% compared to current prices.

The MCA also designed its price review to offer flexibility to interested parties of buying an international link up to GO's designated network node (international and local trunk segments) and continuing towards the required local location (terminating segment) by making use of either their own infrastructure, or that of another provider. This also offers the opportunity to make use of different type of services offered by GO and other local operators, such as an ATM or Ethernet connection when it is technically feasible to do so.

The prices quoted for international leased lines in the MCA's decision cover the costs for a sub-marine connection half-way up to Sicily. In certain instances, prices quoted by GO for specific service requests, such as different foreign destination points or those containing bundled IP-bandwidth services, also include third party costs which are negotiated between GO and its foreign service providers on commercial terms. The MCA cannot regulate these additional third party costs as they fall outside its jurisdiction. This notwithstanding, interested parties are free to purchase the regulated international link from GO and negotiate any additional requirements such as onward connectivity or IP-related services with a provider of their choice on an individual basis.

The MCA feels that holistically, the new prices are better suited to cater for the growing international connectivity demands in Malta. These services constitute an important pre-requisite for the ever-increasing communications demand of modern economies and their inherent information-based societies, which ultimately results in a positive impact on the country's competitiveness and reduced price to the consumer.