Telecoms study puts spotlight on BT

WATCHDOG Ofcom today launched the biggest review of the telecoms industry in this country since deregulation was supposed to open the market up to competition 20 years ago.

The three-stage review is expected to come up with hard-hitting recommendations by the end of the year.

These could have a major effect on BT, the former State monopoly which still dominates the residential market. Ofcom will consider whether it should be broken up into two or more parts to encourage further competition.

The review will also look at the next generation of phone networks which use internet protocol (IP).

BT is committed to build such a network at a cost of billions and Ofcom will examine whether this should be encouraged through tax breaks or other incentives.

At the same time, it will consider how BT's rivals will gain access to the IP network and pay for it.

The review will also ask whether outdated universal service obligations, which mean BT has to run loss-making payphones and supply a telephone line anywhere in the country no matter how remote, are still necessary.

BT chief executive Ben Verwaayen said: 'We are pleased the review will be fact-based and forward-looking. A dynamic industry requires a dynamic regulator.'

But he rejected the 'old chestnut' of calls to break up BT: 'No other nation has contemplated the break-up of a former incumbent. The UK benefits from a strong and vibrant BT.'

editor@thisismoney.co.uk