Users could have a much greater choice of telecoms provider
and potentially lower costs if telecoms regulator Ofcom orders the
separation of BT's wholesale and retail businesses.
Ofcom last week presented its initial findings of a review into how
the telecoms market should be regulated and is considering whether
a break-up of BT would benefit telecoms users.
The Communications Management Association, which represents
telecoms managers in user businesses, has called on the regulator
to take action to prevent BT Retail receiving preferential
treatment from BT Wholesale - the division that sells on the
telecoms giant's services to other telecoms providers.
David Harrington, leader of the CMA's regulatory affairs forum,
said, "We cannot go on as we are. The present situation creates
barriers to entry and reins back innovation.
"The advent of IP-based services has turned old, comfortable
notions of regulation on their head, and a posse of new players is
emerging, all of whom are looking for unfettered freedom to launch
services to businesses," he said.
The association said that competitors to BT Retail are supposed to
receive the same treatment from the wholesale division of the
company. However, when it came to pricing, there was a suspicion
that BT Retail could enjoy better procurement terms, easier
contracts and superior quality of service than BT's rivals.
Ofcom chief executive Stephen Carter said, "We seek to answer
fundamental questions: sustainable competition; the regulatory
role; investment incentives; structural arrangements [of BT]; and
the citizen-consumer interest."
A BT spokesman rejected any proposed break-up, saying such a move
would cause more problems than those currently perceived by its
competitors.
He said the present structure allowed BT to invest in the local
loop and other areas, and a break-up would be a disincentive for
continued investment into the network infrastructure users rely on.
Julian Hewett, an analyst at market analyst firm Ovum, said,
"Splitting wholesale and retail is a good idea - but only in
theory. It might be the way you would design the industry if you
were starting from scratch, but not in today's climate."
He said a break-up of BT would take two years to complete and new
technology products over the next five years could bypass the
current BT network altogether.
Ofcom will publish its recommendations in September.