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The UK is "sleepwalking towards a broadband monopoly" unless BT is stripped of its dominance over the UK's telecoms network.

So says a report from left of centre think-tank, Demos, which calls for the local loop (the wires which links homes and businesses to the main telecoms network) to be put in the hands of a "public interest company".

It is not clear if Demos is calling for nationalisation. But it maintains that handing control of the local loop to a not-for-profit company will maximise access to all telecoms service providers and increase network innovation.

The Demos report,The Politics of Bandwidth, questions whether a private company is the best vehicle for managing the local loop, which it regards as a "natural monopoly" crucial to the success of broadband Britain.

Instead, it suggests that putting the local loop in the hands of a public interest company would make it easier for service providers to compete on a level playing field.

Currently, the UK Government is allowing BT to turn into the "largest and fastest-growing provider of broadband services", an issue highlighted recently in an independent report commissioned by Freeserve.

But Demos argues that the government is wrong and BT dominances will ultimately harm the consumer. "Demos believes...that allowing BT to dominate the market operates against the long-term public interest by reducing network innovation".

Report co-author James Wilsdon said: "While there may be short-term advantage in allowing BT to roll out broadband as quickly as possible, there are longer term risks. The UK is sleepwalking towards a broadband monopoly, with little opportunity or incentive for innovation within the network. "

The report calls on the new communications regulator, Ofcom, to look at the issue of BT's break-up as a "top priority".

BT strenuously denies that such a move would make sense. Just to make sure the monster telco hadn't changed its mind in the matter, we gave them a call.

"It would be utterly against the interest of our stakeholders and serve no useful purpose," said a spokeswoman.

So that's a "no" then. ®

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