BT Bows to Ofcom Break-Up Threat

27 June 2005

British Telecom, the virtual monopoly that controls some 82% of the UK's 25 million-strong telephone market, has finally caved-in to the demands made by media and telecoms regulator Ofcom

In February Ofcom warned the company that it must offer competitors "real equality of access to its phone lines" - or face referral to the UK Competition Commission and the ultimate - but very real - threat of mandatory break-up [WAMN: 07-Feb-05].

Late last week BT undertook to create a new unit that gives rivals the same access to local networks as its own consumer arm, BT Retail. The new entity will have its own board, headquarters and branding.

In a statement Ofcom said it had accepted BT's proposals, noting that a competition inquiry would have lasted at least two and a half years, created a prolonged period of uncertainty and damaged investment in the sector.

The regulator added a rider which appears to acknowledge rivals' concerns that BT might attempt to slither out of its obligations. Should it do so Ofcom would impose financial penalties and seek legal redress if it fails to comply. Rivals could also sue BT for damages.

According to a research note issued by London-headquartered consultancy Ovum: "This is a considerable strengthening of the powers available to impose remedies on BT, something the rest of the UK industry had been seeking. 'In short, Ofcom will have the stick to enforce equality of access."

BT's reaction was typically sour, with ceo Ben Verwaayen expressing the hope that the agreement will put an end to the "moaning culture in the industry". However, he grudgingly conceded: "We now have a regime we can follow, understand and explain."

Data sourced from; additional content by WARC staff