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Unions say 'no' to BT break-up

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The UK's two telecoms trade unions have resolutely rejected any suggestion that BT should be broken up.

Responding to a review of the telecoms industry by regulator Ofcom, the Communications Workers Union (CWU) and Connect insisted that there is no need to separate BT's wholesale and retail arms.

Said Adrian Askew, general secretary of Connect: "Ofcom have asked if the question of whether to separate BT's retail and wholesale arms is still relevant. We are saying resolutely that it is not. "Not only would it be an immense challenge in technical and political terms, it would also undermine investment in the national telecom network and significantly hamper the roll out of nation-wide broadband provision."

In a joint submission to Ofcom, the unions set about demolishing the argument peddled that the break-up of BT would lead to greater competition.

"Even if the separation of BT could be achieved technically," - which Connect and the CWU say would be "immensely complicated" - "any British Government would find it extremely difficult to bring it about politically.

"It is one thing to contemplate separation of the incumbent when it is wholly or partially owned by the Government; it is entirely another thing in the case of BT which is a wholly private-owned company. Both institutional and small shareholders alike - and there are 1.7 million of them - would be angered by such a break-up for no obvious competitive gain."

Hope over experience

Said Jeannie Drake, CWU deputy general secretary: "Such a strategy has not been seen to work anywhere else in the world and so to pursue separation would be to promote hope over experience."

In April, Ofcom published the first phase of its review into the UK's telecoms sector. Submissions from the industry are due in by June 22 - next Tuesday.

Although, Connect and the CWU dismissed calls for the break-up of BT, they want Ofcom to promote investment in the network and to help consumers better understand all the different options available to them.

For while there is plenty of choice in the directory enquiries and mobile phone markets, for example, the pricing structures are so complex consumers find it difficult to chose the best supplier for them.

"People need to be able to make meaningful comparisons of costs and quality of service, and we think the regulator could help with this," said Billy Hayes, General Secretary of the CWU.

The unions also used their submission to highlight the failure of the previous regulatory regime, the now defunct telecoms watchdog Oftel, and to issue a veiled warning to Ofcom not to follow in its predecessor's footsteps.

Negative consequences

"In our view, the record of 20 years of telecoms competition in the UK is only a qualified success. Unquestionably there is more consumer choice. Prices are much lower and quality of service has improved but this is as a result of both increased competition and advances in technology.

"The preoccupation with promoting network competition has had negative consequences for capital investment and led to duplication of infrastructure and not produced the desired level of innovative services on the network.

"Regulation has been detailed, intrusive and unpredictable and, contrary to earlier expectations of a phasing down of interventions, a persistent and costly feature of the telecommunications scene. There has been a lack of regulatory strategy and insufficient focus on creating a world-class national broadband infrastructure to enhance the international competitiveness of UK plc," they said.

Connect and the CWU represent more than 120,000 telecoms workers. ®

Related stories

Ofcom confirms BT break-up review
Ofcom plays down BT split rumour
MPs accuse Oftel of failure to help consumers
Ofcom to probe UK telecom sector

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