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Why BT shouldn't be broken up
Yes, shouldn't...

By editorial@silicon.com

Published: Wednesday 27 November 2002

A research note today from Ovum pours scorn on any possible break up of BT, or any other incumbent European telcos for that matter. The chief analyst at the telecoms consultancy gives four or five convincing reasons why separating out local loop, network and other units would be riddled with pitfalls.

We won't go into these again here but we will say there is one over-riding reason why BT, to use the example closest to home, will stay as one. (This is assuming CEO Verwaayen and co don't suddenly change their minds and themselves bring about an mmO2-style split.)

Simply, there is little political will to control something as complicated as the local loop. There is a common criticism that Oftel is a toothless regulator, yet for all its faults, it doesn't get anywhere near as much flak as BT itself. To take on responsibility for this infrastructure would be for the government to increase Oftel's remit by a very large factor. It would be a high-risk strategy.

Regulating another company with ownership of the local infrastructure - perhaps after another auction? - would be equally difficult.

All that aside, if carving up incumbent national telcos is the way forward - and who knows, by 2007 analysts like Forrester may well be doing the 'I told you so' dance - then why not let the model be proven somewhere else first?

UK industries have too often proven guinea pigs for the rest of the world. The result isn't always first-mover advantage. Ever wonder why we have tube tunnels (and so train carriages) that are patently too narrow, a digital terrestrial platform that went bust, or a congestion charging scheme the whole world will be learning from?

Let this model be proved elsewhere before we resort to operating on BT. Broadband roll out in particular needs further pushes but this is unlikely to be one of them.