Don't split up BT, says government advisor

NEWS

There is not enough evidence to justify the upheaval that splitting BT up would bring, according to Professer Martin Cave of the Warwick Business School in Coventry, and an influential authority on the telecoms industry. Speaking on Monday at the FT world Telecommunications Conference in London, Professor Cave said that instead, the government should get tougher on any misbehaviour, and wait for new technologies to erode BT's local loop monopoly. Breaking up BT has been proposed to prevent the company from gaining unfair advantage due to its ownership of the "local loop" (the telephone lines that reach to homes and offices). However, setting up a separate "LoopCo" to manage the local loop would be difficult to manage as technologies such as fibre, mobile and other wireless networks would blur the boundary, and eventually make the monopoly increasingly irrelevant, said the Professor. He was speaking at a debate on "structural separation" at the conference. The new regime would have to be better than the current one, and return the costs involved with making the change, he said, and this would be unlikely to happen. "Instead, we need to develop better remedies against discrimination." These new powers should come through implementing new European Directives, and increasing "deterrence" through third-party actions. Oftel -- or its successor Ofcom -- could be more active in pursuing potential breaches by BT, said Cave. "Oftel has been too cautious," said Cave. "It should lose some cases." Oftel should have taken up more cases, in areas where the law needed clarification, he explained. Others at the conference were less sure that the law was enough: "Remedies do not work," said Phil Evans of the European Competitive Telecommunications Association (ECTA). "We need a technical review of the structural change required to get the industry fit for purpose." "We should construct a regime that would encourage the incumbent to go ahead with structural separation," said Phil Mochan, managing director of consultancy Compere Associates. "It is for the market to decide." "Creating LoopCo as a 19th or 20th century style utility would not be helpful," said Professor Cave. The actual monopoly would be changed by new changes in the market, he explained. "If the cut is made at the switch of MDF [main distribution frame] in the exchange, then future decisions have to be co-ordinated on either side. Any separation made now may become obsolete." When new technologies are introduced, investment would have to be made by different companies on both sides of the boundary, he said. This could lead to problems similar to those created by the privatisation of the railways, he said. Virgin Railways, for example, planned to introduce tilting trains, which required a track upgrade. Then the track upgrade was scaled back, and Virgin's ability to run tilting trains was wasted. The government's difficulty is in trying to achieve competition and promote the roll-out of broadband, said Cave. The government should not make a "Faustian pact" with BT to achieve roll-out, but it also made no sense to break up the company when the roll-out has reached "the upward part of the S-curve". "The government is trying to achieve competition, and broadband roll-out, using only one instrument," Professor Cave explained. He suggested the government should "wait for the cavalry", in the form of competition for the local loop. This would come from the increasing parity of mobile and fixed services, fibre to the consumer and the availability of Wi-Fi services, he said. In March, Professor Cave advised the government to begin trading in wireless spectrum in a report commissioned by the Department of Trade and Industry.

More enterprise IT news in ZDNet UK's Tech Update Channel.

For a weekly round-up of the enterprise IT news, sign up for the Tech Update newsletter. Have your say instantly, and see what others have said. Go to the ZDNet news forum. Let the editors know what you think in the Mailroom.

s2106101,00.html"> advised the government to begin trading in wireless spectrum in a report commissioned by the Department of Trade and Industry.

Post your comment

In order to post a comment you need to be registered and logged in.

You can also log in with Facebook. Log in or create your ZDNet UK account below

By signing up for this service, you indicate that you agree to our Terms and Conditions and have read and understood our Privacy Policy. Questions about membership? Find the answers in the Community FAQ

ZDNet UK Live

Don't forget to check out apps like GoodReader or SlideShark either, they're indispensible for people on the go in presentation situations. Best...

42 minutes ago by tinycg on Four top iPad apps for people on the move

Well it seems there is something a number of us agree on. Why is the Ubuntu Unity launcher so ugly? I thought perhaps it was something to do with...

5 hours ago by TerryRK on A tale of two distros: Ubuntu and Linux Mint

Duplicate comments are not made intentionally. Its very good to know that now you are keeping check on this problem because sometimes a commenter...

15 hours ago by Freebies202 on Microsoft fixes blog comments, speeds up blogs with open source

"the very significant number of users" and "many (most) of us" - you have no evidence for these statements. It is a fact that most users are saying...

23 hours ago by kevinmchapman on A tale of two distros: Ubuntu and Linux Mint

Another grammar faux pas is the improper use of "you". When sitting down down in a restaurant, for example, I get cringe when the waitress...

1 day ago by Marg Menzies Harrison via Facebook on 10 flagrant grammar mistakes that make you look stupid

And NOW, folks, for Canonical's next trick... Kubuntu is late. Here's a pencil. Draw your own conclusions. cf.:...

1 day ago by zdnetukuser on Linux Minterface

@kevinmchapman. The discussion here reflects the very significant number of users who really do like the traditional menu system and who wish to...

1 day ago by Moley on A tale of two distros: Ubuntu and Linux Mint

Er, no... It is an efficient means of finding the application/file/setting you need in one place. The icons are a simply a fallback for when you...

1 day ago by kevinmchapman on A tale of two distros: Ubuntu and Linux Mint

Isn't the provision of a text based search an admission by the developers that the mass of icons approach does not work? I don't need to use a...

1 day ago by TerryRK on A tale of two distros: Ubuntu and Linux Mint

"Unity and GNOME 3 both abandon the old text-based cascading menus in favour of a graphical icon-driven system." Point truly missed. Both use a...

1 day ago by kevinmchapman on A tale of two distros: Ubuntu and Linux Mint

whs001 - Thank you, I'm glad you liked the article. I absolutely agree with you on your first point. I should perhaps have made it clearer that...

1 day ago by TerryRK on A tale of two distros: Ubuntu and Linux Mint

If we allow corporate interest to dictate the way our government circumvents due process against foreign entities then we should accept the same...

1 day ago by Dennis Nilsson via Facebook on ACTA stumbles in Germany

I totally dislike pirating of works, I fear that artists will be deterred from creating works if they think that they are going to get ripped off....

1 day ago by GHar123 on ACTA stumbles in Germany

How dare film makers, artists or anybody that invests in creativity stop us pirating their works for free. I want to be able to walk into my local...

2 days ago by JCB33 on ACTA stumbles in Germany

@GrueMaster. I prefer horses for courses rather than one size fits all. I, and I suspect most other computer users, do not really wish to have...

2 days ago by Moley on A tale of two distros: Ubuntu and Linux Mint

The product that scares me every time I have to use it is the Office 2007 version of Excel. The first bug that I found was applying the median...

2 days ago by greycynic on Ten flawed products that derail productivity

Nice review and very informative. One thing I'd like to add (in reply to whs001's 1st question), the main reason to have the same interface from...

2 days ago by GrueMaster on A tale of two distros: Ubuntu and Linux Mint

I'be been using Mint 12 since the RC came out, and I am far more happy with the Cinnamon, the Mate, and, yes (with extensions), theGnome 3...

2 days ago by Frederick Wrigley via Facebook on A tale of two distros: Ubuntu and Linux Mint

Excellent article. One small correction, though--although a fresh installation of Linux Mint 12 will, indeed, provide the user with a version of...

2 days ago by bdantas on A tale of two distros: Ubuntu and Linux Mint

In related news, the ISPs club together to get the members of the Home Affairs Select Committee (ya goofed on that part, ZDNet UK) copies of "The...

2 days ago by Alan Ralph via Facebook on MPs urge ISPs to take down terrorist material

Featured white papers

Latest jobs

Don't split up BT, says government advisor

Daily Newsletters

Topics

Related stories

Break-up calls leave BT unmoved

More calls for BT's break-up

Heart of England NHS begins massive digitisation plan

Hard-drive woes hit PC shipments in fourth quarter

Post your comment

ZDNet UK Live

Latest in IT Strategy

Heart of England NHS begins massive digitisation plan

Hard-drive woes hit PC shipments in fourth quarter

Featured white papers

Latest jobs

PHP Web Developer - html, css, javascript

Java Developer, Online Gaming, London

Quant Dev, Hedge Fund, FX, Excel VBA

Inside ZDNet UK

A tale of two distros: Ubuntu and Linux Mint

2012 Predictions: VCE FastPath, VI SAN Probe & Hadoop

BlackBerry Bold 9790

Make faster, smarter decisions using BI

Ten factors that make Ubuntu 11.10 a hit

Toshiba Portégé Z830-10P Review

BT's archive: Pictures from the vault

News & Analysis

Reviews

Blogs

Resources

About Us

Member Services

Special Features

Advertising Features

ZDNet UK / News and Analysis / Business of IT / IT Strategy

Don't split up BT, says government advisor

Daily Newsletters

Topics

Related stories

Post your comment

Get ZDNet UK's daily newsletter

Enter your email address to sign up

ZDNet UK Live

Latest in IT Strategy

Featured white papers

Latest jobs

Inside ZDNet UK

Resources

About Us

Member Services

Special Features

Advertising Features