Big is beautiful - the case for BT's freedom

The British like to sell-out. How many UK-based businesses do you know - both young and old, high-tech or otherwise - that have been bought by companies based overseas? Put aside IT firms such as Dr Solomon's (bought by Network Associates) and ICL (majority owned by Fujitsu). Think Rover, Rowntree, and most of the country's largest investment banks.

But what chance BT, the UK's largest communications company, falling into foreign hands? Most people won't even entertain the thought. For years, as a state-owned company, it wouldn't have been possible. And now, after steep rises in its market valuation, it would require one of the biggest ever take-over deals.

But could that happen? Last year at a press conference, there was laughter when Bernie Ebbers, MCI WorldCom's outspoken CEO, said that after prizing MCI away from BT, he might just come after BT itself.

The trouble is that Oftel - egged on by BT's competitors - is bemoaning the fact that after more than 10 years of market deregulation, BT still holds the lion's share of the consumer market and remains the principal telecoms provider for a lot of business customers.

But that's missing the point completely. The most important thing is for the regulator to make sure users get a good deal - especially in comparison to other countries.

As long as prices are low, and service quality and choice are good, it doesn't matter if there is only one supplier. The dangerous assumption is that competition alone - measured in terms of market share - leads to improvements.

Realistically, the only way BT will sell-up is if it feels it's no longer in a position of power internationally. That isn't the case now - note BT's presence in most European markets and further afield, for example the Far East. The telco's international alliance with AT&T - which had been rumoured to be the first stage of a full blown take-over-cum-merger before its official announcement - also increases the company's clout.

But make no mistake, if the offer was right - following, say, a period of stagnating revenues - BT would consider being taken over. Chief executive Sir Peter Bonfield admitted as much after the latest spate of rumours in the summer. As head of a publicly quoted company, he has to say shareholder value comes first, and who knows, such a move may even benefit customers.

Would this sort of move be tolerated in Germany or Japan? Probably not. Even laissez-faire Americans were peeved when Daimler-Benz moved in for Chrysler.

The regulator should concentrate on the service BT gives its customers, not its size. That way users will get a better deal, and the UK won't wave goodbye to another giant.