Oftel urged to act on broadband

Fast net access in Britain is more stop than go

By BBC News Online internet reporter Mark Ward

The historic opportunity offered by BT's impending break-up must be seized by the government if it is serious about creating broadband Britain, a report has warned.

A working paper drawn up by the political think-tank, the Institute of Economic Affairs, urges the government to make sweeping changes to the regulations governing the running of BT's local and national network.

Without tough regulations in place that make access to the nation's net infrastructure cheap, easy and open, Britain risks being left behind in the race to create a vibrant electronic economy, it warns.

The slow pace of access to existing networks has already made many companies rein in their plans to offer cheap, high-speed net access to consumers.

Working warning

In November 2000 BT announced its intention to split itself into a series of businesses broadly organised around the different networks the company operates.

One of the biggest companies to emerge from this demerger will be the NetCo organisation that will take over the running of BT's fixed network infrastructure.

At the moment a division of BT called Ignite runs this network and is supposed to treat both BT and its rivals the same when arranging for them to get access to telephone lines.

BT is facing a threat of legal action from Freeserve and AOL UK over high-speed net connection services because the two net connection firms claim that Ignite is giving BT preferential treatment. BT rejects these claims.

The issue of getting access to this network has become more important of late thanks to the rise of the internet.

Oftel is attempting to foster competition by forcing BT to let its rivals take over connections between homes and telephone exchanges, so they can offer their own brand high-speed services.

But the slow pace and high cost of this local-loop unbundling process has forced nine of the bigger network companies to rein in or abandon plans for their own broadband services.

Tom Steinberg, a researcher at the Institute of Economic Affairs, says the impending break-up offers the chance to radically alter Britain's net landscape, force the pace of genuine competition over high-speed net services and begin creating broadband Britain.

Rare chance

"It's a once in a parliamentary lifetime possibility," said Mr Steinberg. "Government intervention can come in without the massive knock-on effect on shares that would result if out of the blue it said it wanted to break up a successful company."

Mr Steinberg says the current wrangles over access to BT's network have emerged because granting rivals access stands in direct opposition to the job BT is trying to do for its shareholders.

But when NetCo takes over the running of the infrastructure, the government has the opportunity to write into its operating licence a demand that it maximise the numbers of telecoms companies using the network.

"There will never be a less painful moment for the government to do this," said Mr Steinberg.

He said the government should make the new owners of the infrastructure regard the network in the same way that property developers view the buildings they own.

While they do not care what people do inside the buildings, it is in a property owner's interest to maximise the tenants paying to use it.

Without such action Mr Steinberg fears that broadband Britain will only emerge slowly and it could take years before a significant number of Britons are roaring down the information superhighway at high speed.

This week the DTI and the Office of the E-Envoy released a report that looked at the effect that broadband links have on homes and business life.

The report found that the speed, the always-on nature of broadband links and the fact that they are charged for at fixed monthly rates boosts use of the web and accelerates moves to a more networked, efficient economy.