Broadband boom saves BT from break-up

Oftel rejects calls to split BT's network and retail operations, pointing to evidence that Broadband Britain is finally coming to life

The recent surge in broadband take-up in the UK has saved BT from the threat of being forced to split its retail and network operations.

UK telecoms regulator Oftel published its response to the Culture Media and Sport Committee report on communications on Wednesday, and ruled out breaking up BT. It insists that it has enough powers to deal with anti-competitive behaviour.

"Because Oftel has sufficient regulatory powers to develop a competitive broadband market, the option of breaking up BT is therefore not on its current agenda. Competition in the broadband market continues to increase, with prices cheaper in the UK than in France or Germany," said Oftel.

Key to Oftel's decision is the boom in the number of people signing up for broadband, following the price cuts made by BT earlier this year. "The UK is on course for 750,000 broadband connections by the end of July," added Oftel.

On 1 May the Culture Media and Sport Committee has recommended that Oftel, or its successor Ofcom, should consider separating BT's network business from the rest of the company. Such a move, the select committee claimed, would increase competition in the UK's broadband market.

Cable & Wireless told the committee that BT was to blame for the poor take-up of broadband in the UK compared to other countries, and urged that action be taken against it.

The select committee held its hearings in the first few months of this year, and since then there has been a significant improvement in the health of the UK's broadband market -- largely thanks to a change of heart at BT.

Soon after becoming BT's chief executive at the start of this year, Ben Verwaayen announced a new policy towards broadband. Slashing the wholesale cost of ADSL, to £14.75 (exc. VAT) per month from £25 (exc. VAT) per month, allowed ISPs to offer broadband for less than £30 per month.

As ZDNet UK reported last week, broadband take-up is now booming. At the time the select committee was hearing evidence only 126,000 customers were using BT Wholesale's ADSL -- six months on, there are at least 280,000 ADSL end-users.

BT has been accused many times -- including at the select committee hearings -- of obstructing the process of local-loop unbundling (LLU) so as to ensure it monopolised the wholesale broadband market. BT has denied making it difficult for its rivals to install equipment at its exchanges to they can offer their own wholesale services -- and there is evidence that LLU may be reviving.

Easynet said earlier this month it was making a good progress with its LLU rollout, while Bulldog -- formerly one of BT's most strident critics -- has teamed up with the incumbent telco to launch an SDSL service for London businesses.


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