Oftel rules out break-up of BT

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OFTEL has ruled out the break-up of British Telecommunications in spite of the recommendation by the Monopolies and Mergers Commission that British Gas be split.

The MMC proposals, published in a summary report last week, fuelled speculation that BT, which like British Gas dominates its market, would be next on the list for break-up.

Earlier this year Oftel said it wanted to see different parts of BT's business split in accounting terms by the end of this financial year and 'fair' interconnection charges set for other telephone companies that need to use BT's wires.

However, it said then that it saw no case for the company to be broken up.

Don Cruickshank, Oftel's director-general, has confirmed that this view still stands, regardless of the MMC's conclusion that conflicts of interest meant that British Gas needed to hive off its trading activities into a separate independent company if competition was to flourish.

'That is what we said and we have not qualified it at all. There are no weasel words here,' he said.

The MMC said British Gas should divest its trading arm and should see its monopoly reduced and eventually eliminated.

The proposal is that all gas consumers should be able to shop around for their supplies by 2002.

However, in spite of the parallels drawn by many observers between BT and British Gas, Mr Cruickshank said that the telecommunications market was 'already getting to where the gas industry wants to be in 2002.'

He is particularly keen on the contribution that can be made by cable television companies, most of which are planning to offer telephone services or already do so.

Mr Cruickshank said no obvious parallel could be drawn between BT and the other former nationalised utilities. He had met the other regulators but believed that while they were all concerned for consumers and for competition, they were all doing very different jobs.

'Each of us is having to think through a route for ourselves according to the potential structure of the industry and the technologies available to us,' he said.

He believes that telecommunications has a particular advantage in the range of technologies that can be used to promote better services and more choice.

Mr Cruickshank, who joined Oftel from the Scottish National Health Service in April, said he was engaged in defining in his own mind what Oftel should be trying to achieve and how best to go about it.

He added that he wanted to give the industry a clear explanation of his objectives and find out how they would judge the watchdog's performance.

He rejected the criticism in some quarters that regulation was governed too much by the personality of the chief of the individual watchdogs.

He said the history of regulation showed that the issue of personality was not new but went back many decades.

'History suggests that the balance struck in the UK over the last 10 years is better than it has been in the past in getting the balance right between the power of the regulator and the freedom of the regulated.

'It is also better in having the mechanics for distinguishing between personality clashes and straight clashes on points of view.'

Strong support exists for the break-up of British Gas among Conservative MPs, but the idea is overwhelmingly rejected by Labour backbenchers, according to an opinion poll published today.

Conducted for ScottishPower's gas subsidiary, Caledonian Gas, an independent supplier, 100 MPs on the Political Opinion Panel maintained by Access Opinions were asked whether they supported the ending of British Gas's domestic monopoly subject to proper assurances on safety and supply.

The poll showed 79 per cent of Conservative MPs in favour of the proposition, but only a quarter of Labour MPs. On a cross-party basis the split was 56:35 in favour.

(Photograph omitted)