MPs unhappy over ADSL dominance

The Trade and Industry committee is worried about the lack of proper broadband competition in Britain, but doesn't reckon chopping up BT is the answer

A group of MPs has warned that Britain's broadband market could suffer because BT is the only company capable of running a national high-speed network at present.

The Trade and Industry select committee, in a report published on Tuesday, said that it didn't believe BT should be broken up but regretted the fact that ISPs have little option when buying wholesale broadband services to resell to users.

"We would naturally support any effort to ensure that investment in the existing network is sustained and that the rollout of other, alternative means to deliver broadband is encouraged. However, these alternative means of delivering broadband will not be sufficiently extensive to provide a genuine, nationwide alternative to BT's ADSL network, at least in the medium term," said the UK Broadband Market report.

BT's ADSL network currently serves about 85 percent of UK homes and businesses, and is expected to reach 99 percent coverage by the end of 2005. In contrast, only around 40 percent of the country can get a cable broadband service from NTL or Telewest, while local-loop unbundling has so far failed to open up much of BT's network to other telcos.

A product called Datastream allows rival telcos to connect their networks with BT's "last mile" copper links to homes and offices, but there has been considerable anger from those telcos, who say BT is charging too much for this service.

The Trade and Industry committee agrees that the current situation isn't helping broadband competition. "As yet DataStream has failed to deliver the competition in the wholesale broadband market, and, in turn, in the retail broadband market, that had been hoped of it," it says in the report. "The danger is that, because of a lack of confidence rather than a lack of demand, there is insufficient uptake of DataStream and it will ultimately be allowed to wither."

The Broadband Industry Group, which consists of a number of BT's competitors, has welcomed the report's findings. "The report confirms what the industry already knows -- that the current regime has not delivered, and competition in the wholesale broadband market does not yet exist," claimed the Broadband Industry Group in a statement. "Without decisive action a true mass market in broadband will remain beyond our grasp."

BT, which also gave the report its backing, said it was pleased that the committee had not pushed for its break-up.

"This is an argument that has been pushed forward by a few interested players and it is encouraging to see that the committee has taken the only realistic view on this subject -- i.e. that a strong BT is central to the creation of Broadband Britain," said Ben Verwaayen, the telco's chief executive, on Tuesday afternoon.