Ofcom confirms BT break-up review

'Old chestnut' resurfaces

By Tim Richardson, 28th April 2004

Magic Quadrant for Enterprise Backup/Recovery

Ofcom is to dust off an "old chestnut" and investigate if BT should be broken up as part of its strategic review into the UK's telecoms sector.

Publishing the first phase of its consultation into the year-long review, the communications regulator poses five fundamental questions. The one that is certain to grab the headlines reads: "At varying times since 1984, the case has been made for structural or operational separation of BT, or the delivery of full functional equivalence. Are these still relevant questions?"

On Monday Ofcom played down reports that it would be examining the possible split-up of BT claiming that it was "exploring a large number of 'what if?' scenarios" and that "all such discussions are entirely hypothetical and discursive in nature".

However, confirmation that Ofcom is to consult on the matter is likely to re-ignite discussion about whether BT's wholesale and retail divisions should be split.

BT welcomed the comprehensive review of the UK telecoms sector and said that it "wants an environment in which people, businesses and organisations can benefit from communicating and sharing information in the way they want when they want".

BT chief exec Ben Verwaayen said: "The Ofcom review asks a number of fundamental questions and we welcome the chance to put forward our views. We're pleased that Ofcom say that the review will be fact-based and forward-looking. A dynamic and forward-looking industry needs a dynamic and forward-looking regulatory environment."

But on the issue of its future, the company said: "One question raised is the old chestnut of breaking BT up. It is, of course, right that Ofcom asks the question. The answer is self-evident. No other nation has contemplated the break-up of a former incumbent and the arguments against such a move are well rehearsed.

"The UK economy benefits from a strong, vibrant and competitive BT. Hundreds of other business and suppliers benefit from BT's commitment to the UK telecoms sector and an end-to-end provider is the way to achieve that."

The telecoms review is also looking at a number of other issues including competition in voice services and the future impact of VoIP. Ofcom is also seeking consultation on the future growth of the broadband sector and universal service obligations.

The strategic review can be found at Ofcom's website here. The deadline for submission for this first phase of the review is 22 June. ®