26 April 2004 Ofcom, the UK’s telecoms and media regulator, is considering breaking up telecoms giant BT to promote competition and improve regulation.

Rival telecoms companies have long complained that BT, which was state-owned until 1984 and still runs nearly three-quarters of UK residential phone lines, has enjoyed a near-monopoly that stifles innovation.

A split would most likely be between BT Retail, its customer-facing division, and BT Wholesale, which operates its networks. All competing telecoms operators have to negotiate with BT Wholesale to use its infrastructure.

BT denies that this constitutes a conflict of interest and says previous investigations into a break-up have supported this claim.

“We’re confident that there is no valid argument to break up BT,” a spokesperson told the Financial Times. “Any arguments that BT Retail receives preferential treatment from BT Wholesale are complete nonsense.”

Even some of BT’s competitors agree with its stance; Cable &Wireless recently withdrew its demands for BT’s break-up. Some members of the Government also oppose an enforced split because they fear it would hinder the spread of broadband.

If it did order a break-up, only BT Wholesale would subsequently be subject to Ofcom regulation.

Ofcom’s investigation is part of a wider review of the telecoms sector launched shortly after the regulator’s inception in December 2003. It has been seen as an indication that the new body will not be averse to radical intervention in the industry.