BT broadband strength sparks Parliament fight

Under fire from MPs who said that breaking up BT would open up the broadband market, the company has denied that it is 'arrogant and dominant'

A Parliamentary investigation into the UK's broadband market turned rowdy yesterday afternoon, as BT vigorously rejected claims that it should be broken up.

Members of the Trade and Industry select committee angered Ben Verwaayen, chief executive of BT, by claiming that BT had an unhealthy dominance over other telecoms companies in the UK, and that splitting the telco in half would benefit the British broadband market.

The MPs, led by committee chairman Martin O'Neill, told Verwaayen that they had heard complaints from other companies that BT acts in an anti-competitive manner to maintain its market share, leading them to suspect that BT's wholesale and retail operations should be separated into different companies.

Verwaayen responded that this would be bad for the entire market -- and also claimed that many of the complaints filed against BT were opportunistic.

"If you are a competitor of BT's, then the one golden rule is to file two complaints a week. We have become a complaints industry," said Verwaayen. He explained that the complexity of the UK telecoms market means that lowering the price of one of BT's products can have a knock-on effect on several others.

Verwaayen also denied that BT -- which has almost all of the wholesale market for ADSL but only 50 percent of the retail market -- was a dominant player. "We're strong, not dominant," he said, pointing out that NTL and Telewest have nearly as many customers as BT Wholesale.

The committee, though, had earlier heard NTL accuse BT of an anti-competitive pattern of behaviour over the past few years. The idea of splitting BT's network operations from its retail side is an old one, but O'Neill raised it as an option and demanded to know what the problem would be if BT had a smaller market share.

"It would be a less innovative market," claimed Verwaayen, who said that the creation of a dynamic market with exciting new services was a better measure of success than just getting BT's share of the broadband market down.

"You're not the only innovator around," O'Neill snapped back. "You've not got a God-given right to innovate."

"Your company, because of its size, strength and position in the market is an arrogant organisation that can unduly influence the market," O'Neill added, raising the temperature of the meeting even higher.

"BT is a company of 108,000 people, and I'm simply not going to accept the claim, on behalf of those people, that we're arrogant," insisted Verwaayen fiercely.

Ironically, the committee had already been told by several independent organisations that splitting BT would be a bad idea.

When asked whether he regretted not pushing for the separation of BT back in 1997, Oftel director general David Edmonds said he was extremely relieved that he had taken the decision not to.

"With all the benefits of hindsight, if we'd used the Enterprise Act six years ago to split BT it would have been catastrophic, as the separation would have taken place during the telecoms downturn," explained Edmonds.

"If we chose to do it now, the effects wouldn't be catastrophic, but I don't believe that a case has been proven," Edmonds added.

The select committee also heard that Britain is on the verge of signing up its three millionth broadband user -- a sign that the UK's high-speed Internet market is still enjoying very strong growth.