Break up BT, rival chief urges ministers

BT must be broken up for Broadband Britain to become a reality, a House of Commons select committee has heard.

The alternative is a return to total monopoly, with potential opposition destroyed by economic downturn and an anti-competitive market, according to Cable & Wireless chief executive, Graham Wallace.

He told members of a culture, media and sport committee looking into the role of Ofcom that BT's market dominance should be investigated by the Monopolies and Mergers Commission, with a view to possible restructuring.

"The maintenance of the status quo is not an option if we want a competitive market in the UK," he said.

Wallace blames sluggish growth in the ADSL broadband market on high prices caused by BT owning both a retail business and the local loop - the last mile of the telephone network connecting individual users to local exchanges.

"The solution is to separate the natural monopoly of the local loop from the rest of BT's activities.

"The current model encourages BT to minimise investment and maximise prices - that's what monopolists do," said Wallace.

Earlier BT chairman Sir Christopher Bland said the sector's financial problems made the company even more important to the growth of broadband.

"The advantage of having a strong incumbent is greater now than it was 12 months ago, as alternative networks are, by and large, in danger of becoming busted flushes.

"You can't look to other people, to cable companies or wholesale unbundlers, to do as much [for broadband rollout] as we might have expected a year ago," he said.