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EDITIONS
Monday, 4 November, 2002, 15:50 GMT
Think-tank calls for BT break-up
Still from BT's broadband advert
BT has spent millions advertising broadband
BT should be broken up if the UK wants to play a role on the worldwide broadband stage.

That is the conclusion of a report - The Politics Of Bandwidth - compiled by Demos, a left-wing think-tank on behalf of Cable & Wireless.

It has urged new super-regulator Ofcom to tackle the issue as a priority when it comes into operation next year.

The crucial issue is BT's domination of the last mile of telephone lines, which connects homes to the telephone exchange and is known as the local loop.

Ducking the issue

Demos argues that the local loop must be put in the hands of a public interest company, referred to in the report as LoopCo, in order to promote innovation and ensure plenty of different service providers can use it.


The UK is sleepwalking towards a broadband monopoly

James Wilsdon, Demos
"The UK is sleepwalking towards a broadband monopoly, with little opportunity or incentive for innovation within the network," said co-author of the Demos report James Wilsdon.

"The government has consistently ducked this issue and tackling it should be a top priority for Ofcom from the start," he added.

Local loop unbundling has been something of a contentious issue within the UK telecoms industry. Envisaged by telecoms watchdog Oftel as a way of breaking BT's stranglehold and opening up broadband to competitors, it was poorly received and to date few operators have taken advantage of it.

Many in the industry describe it as an abject failure.

Demos believes that Ofcom will face a growing chorus of voices arguing for the break-up of BT as the only realistic way forward.

By contrast, it said, the government seemed happy to allow BT to become the dominant broadband provider in the UK.

While that strategy had yielded success stories such as the recent milestone of one million broadband users, it was short-sighted, said Mr Wilsdon.

No point

"While there may be short-term advantage in allowing BT to roll out broadband as quickly as possible, there are longer term risks," he said.

"It is about whether the UK is happy to be relying on BT or whether it wants to allow other operators to have a crack of the whip. BT's track record on innovation isn't exactly outstanding," he added.

Ofcom chairman Lord Currie may find the pressure on his new watchdog hard to rebut, not least because he published a paper in favour of structural separation of BT before his appointment.

BT has repeatedly dismissed calls for its break-up, pointing out that there have been no successful telecoms separations anywhere in the world.

"We believe that the UK already has one of the most competitive broadband markets in the world. Break-up is not in anyone's interest and would hinder the development of Broadband Britain," said a BT spokesman.

See also:

22 Oct 02 | Technology
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