Regulator reopens debate over BT break up plans

Communications regulator Ofcom has reopened an old debate about whether BT should be split up by asking the question in a consultation document.

The consultation is the first of two being undertaken as part of Ofcom’s strategic review of the UK telecoms sector. The review, which is due to be completed by the end of this year, is being carried out in three phases.

The suggestion to split up BT so the telecoms network would be run as a completely separate business was originally suggested by Cable & Wireless in 2002.

The company told the House of Commons Culture, Media and Sport Select Committee at the time that it would be a means of improving competition, but the idea was rejected by Oftel.

The current consultation is also unlikely to lead to the break up of BT, according to Julian Hewett, chief analyst at consultant firm Ovum.

“A separation would take at least two years to achieve,” said Hewett. “It would be immensely costly and disruptive.” He also points to the possibility of a “Railtrack” like political disaster occurring.

“A failure with telecoms could damage broadband deployment and national productivity,” said Hewett. “In the end, we think they [Ofcom] will file this one in the ‘too difficult’ box.”

The consultation also asks how competition should be measured and in which market segments could competition actually be achieved in the UK market. Ofcom is also examining if there is scope to reduce regulation and how it can continue to encourage investment. The closing date for comments is June 22, 2004.