BT is holding back Broadband Britain

Broadband in the UK is being held back by BT, according to a report from the Institute of Economic Affairs published Monday.

A working paper from the political thinktank urges government to seize the initiative and ensure that the breakup of BT leaves the UK with a network to which everyone has fair and equal access.

Both AOL and Freeserve are on the verge of instigating legal action against BT, claiming that it is currently giving preferential treatment to its own ISP in the rollout of broadband services. BT has been accused of deliberately slowing down the rollout of ADSL and, following recent decisions by nine operators to withdraw from the unbundling process, calls on government to intervene against BT have been getting louder.

In response to these criticisms, BT announced in November last year its intention to create a series of autonomous businesses in what the telco described as the most radical shakeup in its history. But Tom Steinberg, author of today's report, said he believes this breakup does not go nearly far enough.

"The breakup is not much of a break-up and the government, via Oftel, should ensure that the network is owned by separate shareholders," he said.

The ideal solution is described in the report as an open network, owned by shareholders who wish it be open to as many service providers as possible. It is envisaged that such a network would avoid the clash of interests seen at present within BT -- such as the competition between ISDN and ADSL services and the broadband issue that is driving AOL and Freeserve to the courts.

Only last week, critics slammed e-minister Patricia Hewitt for not going far enough when the government then launched a new strategy to underline its commitment to broadband Britain.

BT currently runs 85 percent of broadband services in the UK but Hewitt said last Tuesday there was no need for government intervention. Instead, she said, the government plans to offer £30m to deal with the increasing broadband divide between urban and rural areas and a relaunch this summer of the broadband fixed wireless auctions.

Is broadband coming to your neighbourhood? Find out with ZDNet UK's Broadband Britain Guide.

BT needs to transform itself into a keenly inspired organisation, where marketing and technical people work together to offer new and exciting services to an amazed market. Guy Kewney says -- in reality, what seems to be happening is that a bunch of dyed-in-the-wool civil service bureaucrats are harnessed to an army of jobsworth telegraph-pole monkeys who obstruct any effort made by strategists to make things happen. Go to AnchorDesk UK for the news comment.

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