Reports on Monday claimed that Carphone Warehouse is planning to invest millions of pounds in installing its own equipment in BT's local exchanges — a process known as local-loop unbundling (LLU).
At present, Carphone Warehouse resells BT's wholesale broadband. A move into LLU would allow it to offer different services, such as IP telephony or faster Internet access, and have more flexibility in pricing.
Carphone Warehouse didn't immediately respond to requests for comment on the issue, which was first reported in The Sunday Times.
LLU has the potential to break BT's grip on the UK's wholesale ADSL market. After years of failure, unbundling now appears to be taking off. Sky has recently agreed to buy Easynet, which runs an LLU network in many metropolitan areas, and is expected to spend hundreds of millions of pounds installing its own equipment in BT's exchanges.
However, the process has been hit by technical problems. Back in August, BT suffered a series of software glitches which hampered LLU operators who were trying to unbundle lines.