BT offers equal access to rivals

BT has moved to pre-empt a possible break-up of its business by offering to cut wholesale broadband prices and open its network to rivals.

The move comes after telecom regulator Ofcom said in November that the firm must offer competitors "real equality of access to its phone lines". At the time, Ofcom offered BT the choice of change or splitting into two. Ofcom is carrying out a strategic review aimed at promoting greater competition in the UK telecom sector. BT's competitors have frequently accused it of misusing its status as the former telecoms monopoly and controller of access to many customers to favour its own retail arm.

This latest submission was delivered to the watchdog ahead of a deadline for the second phase of its review.

"Central to the proposals are plans by BT to offer operators lower wholesale prices, faster broadband services and transparent, highly-regulated access to BT's local network," the former monopoly said in a statement. "The United Kingdom has the opportunity to create the most exciting and innovative telecoms market in the world," BT chief executive Ben Verwaayen said. "BT has a critical role to play, and today we are making a set of far-reaching proposals towards that framework," he said. BT wants lighter regulation in exchange for the changes, as well as the removal of the break-up threat.

The group is to set up a new Access Services division - with a separate board which would include independent members - to ensure equal access for rivals to the "local loop", the copper wires that run between telephone exchanges and households. The company also unveiled plans to cut the wholesale prices of its most popular broadband product by about 8% from April in areas of high customer demand.

It added that it plans to invest £10bn in the next five years to create a "21st Century network". To meet the growing demand for greater bandwidth, BT said it would begin trials in April with a view to launching higher-speed services nationally from the autumn.

Telecom analysts Ovum welcomed the move, saying BT had "given a lot of ground".

"The big question now is whether the industry, and particularly Ofcom feels BT's proposals go far enough ...Now the real negotiation begins," director of telecoms research Tony Lavender said. Internet service provider (ISP) Plus.net also backed the proposals saying "we will be entirely happy if Ofcom accepts them". "BT has been challenged to play fair and its plans will introduce a level playing field. The scenario now is how well people execute their business plans as a service provider," chief executive Lee Strafford said. Chris Panayis, managing director of ISP Freedom2surf said that it would make the situation clearer for business. "I think it's the first productive thing we've had from BT," he said.

AOL backed the price cuts but said regulation was still needed to ensure a level playing field. "This is a reminder to Ofcom that as long as BT can change the dynamics of the whole broadband market at will, the process of opening up the UK's local telephone network to infrastructure investment and competition remains fragile," a spokesman said. "Ofcom needs to return to regulation of the wholesale broadband service [IPStream] and provide more robust rules for local loop unbundling if consumers are to see the benefits of increased competition and infrastructure investment." More than 100 telecom firms, consumer groups and other interested parties are expected to make submissions to the regulator during this consultation phase. Ofcom is expected to spend the next few weeks examining the proposals before making an announcement within the next few months.