Break up BT now, say rivals

Telecoms firms fear there will be an unfair advantage in high-speed net access
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The Independent Online

Telecoms companies are pressing the Government to force BT to carve up its business before it opens up its monopoly on high-speed access on the internet.

Telecoms companies are pressing the Government to force BT to carve up its business before it opens up its monopoly on high-speed access on the internet.

It is understood that rival telecoms operators have made the suggestion in private meetings with David Edmonds, head of telecoms regulator Oftel. The companies believe that if BT doesn't split off its infrastructure division from its commercial operations, it will have a competitive advantage when it ends its monopoly on high-speed internet access via "local loop unbundling" to run the new DSL line technology.

Both BT and Mr Edmonds have come under intense criticism for their handling of local loop unbundling. The biggest bone of contention is that many of the 5,500 local exchanges are not large enough for the rival companies to install their equipment. It is feared that this will result in a "lottery" for the prime sites while BT will have access to all the exchanges.

One rival operator, who asked not to be named, said: "BT will be able to allocate space for all its divisions, such as Ignite, while the rest of us will have to fight it out.

"BT will have a clear competitive advantage."

The companies believe that if BT splits off its infrastructure division as a separate company before local loop unbundling takes place, the allocation process will be fairer.

Last week BT and Mr Edmonds came under renewed pressure from European telecoms commissioner, Erkki Liikanen, to unbundle the local loop by 1 January. He warned that if the deadline was missed, the UK government could be in breach of EU law.

However, UK telecoms operators have resigned themselves to the fact that unbun- dling won't be fully complete until the middle of 2001 at the earliest. Just 361 of the 5,500 exchanges will be opened up by 1 January, with a further 500 to be opened in March next year.

"If BT's infrastructure equipment was owned by a separate company it certainly would have a greater incentive to press on with local loop unbundling," said another telecoms operator.

While Oftel does not have the direct power to force BT to spin off separate divisions, analysts said that a float of BT's infrastructure could well be on the cards.

BT's chief executive, Sir Peter Bonfield, is nearing the end of a year-long strategic review of the business. It is understood that one of the options under consideration is to float off different divisions to realise the value locked up in various parts of the company.

This year BT's shares have fallen 42 per cent which has aroused serious shareholder unrest, and even triggered the resignation of finance director Robert Brace earlier this month. He was swiftly replaced by Philip Hampton from BG, once British Gas. A well respected City figure, Mr Hampton handled the break up of the former state gas monopoly.