When Ofcom announced is Strategic Review it included an innocent question asking everyone to consider if BT should be broken-up, so call Structural Separation. Recently a number of major ISPs published an open letter saying that this should be given careful consideration and that they favoured a referral to the Competition & Markets Authority (CMA). Their position is more nuanced than many of the headlines the letter generated – this doesn’t mean they are firming in favour of breaking-up BT, only that they have serious concerns about the shape of the market which BT dominates.

My own view is that Structural Separation is simply a regulatory instrument that if wielded in isolation would achieve very little – it would replace one monopoly with two, and the siblings have very deep cultural ties that were forged at the dawn of telecoms time. It would take several years to resolve the legal challenges to separation, and the many more before the cultural challenges are overcome.

Its true that in New Zealand it has made a radical difference but, with due respect to New Zealand, its got a population just over half that of London – BT’s domain is almost 20 times bigger, and its organisation is consummately bigger – it’s a supertanker to NZ’s speed boat. Structural Separation in the UK will achieve very little slowly.

In addition, the New Zealand Regulator didn’t simply declare Structural Separation; they put in place a series of measures to ensure it led to a market shape of their design, and they closely monitored the evolution.

In the UK we haven’t had the discussion about what kind of market we want or need, and we don’t have a regulator that has been strong on monitoring or enforcing change. For these reasons alone, we should be calling for a referral to the CMA – so we can have the public debate about the kind of market we want and what kind of regulation that new market will need.

There are some fundamental and huge shifts in the shape of the market already underway, some of which appear to be largely undebated. I don’t have the answers, and anyone that says they do is almost certainly wrong, but this debate needs to begin and it needs to be grown-up and open-minded.

I’m planning to post some of my thoughts over the coming weeks – I hope others will too.

    • Bill Lewis says:


      I would guess it would be a duopoly at best . It would in my view be a bit like separating conjoined twins. I mean the majority of Broadband provision for example is via “phone lines” these lines are owned by Openreach and they and BT retail have access to all the details of the people who use these lines.

      Other providers do not. How would you split that inter dependency and competitive advantage up in any attempt to level the playing field?

      The big thing trumpeted by BDUK was competition, where is this competition if most providers are merely parasites to a single infrastructure? The days of LLU are all but gone, the infrastructure is predominantly OR , you pay to use it and play smoke and mirrors with pricing to the end customer.

      The Monopoly that lies beneath is significant and as I have observed before, they give out plenty of line to appease regulators and ill informed politicians then once the cash is spent they reel it in by using the competitive advantage they gained.

      The sports rights / BT sport issue is an example. Paid for with a similar level of money they received as the first benefit cheque for broadband provision. Showing that if that money had instead been used for that purpose , not ours, then they may of not bid quite so high to guarantee they won?

      I remember back in the dial up days of btinternet when the Friaco stuff popped up and how that was engineered to get around regulation. separate companies etc.. that once hooked and nobody was looking, was reeled back into the fold.

      ADSL was similar , exchanges were deemed non viable , the state coughed up to enable them . Except a few for some odd reason. Those few BT flatly refused to supply the “competitive” ADSL product to , despite many attempts by councils and quangos to push them .

      Now those exchange areas are having FTTP rolled out to every property and by that i mean every property even if a lone house a mile or two up a single track road. Are BT paying for this? nope. they left that line out in the pond for way over a decade , but it has paid dividends now, regardless if anybody actually uses the infrastructure or not.

      I used the spoilt child analogy in another post here, which may or may not clear moderation before this one, this only clarifies the situation.

      BT themselves are not really to blame, they clearly stuck to their commercial grounds with ADSL and FTTC by declaring unviable/non profitable areas . The ineffectual babysitters, Government generated the situation and distorted the market place by rushing to “fix” the issue .

      Now how do you try and break up that cosy relationship externally, let alone sever ties internally between divisions ?


  1. Chris Conder says:

    IMHO we need competition. The current funding now being wasted on propping up a failing copper infrastructure with FTTC to help a few near cabinets go a bit faster was a massive mistake. The money should have gone to alnets to deliver a fit for purpose connection to the rural areas. That would have made openreach up their game. We would all still be on dial up if it wasn’t for Virgin competition in cities. Forget separating openreach, it will take far too long and waste even more money. Just get support for alternative businesses. Competition is king.
    We need more fibre. Moral and Optic.

    • Adrian Wooster says:

      I don’t disagree but it leaves a lot of questions unanswered like what happens to the universal service commitment, blue-light phone call handling, and the role of service providers in a largely vertically integrated altnet market.

      • Bill Lewis says:

        The USC is a red herring surely. The way commercial markets work if left to their own devices surely means each will strive to provide more than the other to gain market share. The basics of Return on Investment.

        Those that don’t compete, eventually die.

        Slapping some minimum speed requirement on at government level has in my view no benefit at all. Especially if the USC given favours one particular suppliers product over others.

        Same for telephone. The regulator dictates BT have to maintain exchanges and phone lines , why ? , back in the day when the GPO was a recent memory it made sense. there was nothing else to fill the hole. Now entire communities can run Voip over independent Fibre or wireless networks and many do.

        The Exchange USO is defunct but as long as it exists BT / Openreach will obviously do whatever they can to protect that resource.

        Operating exchanges with no clients on them would make no commercial sense if they were not under obligation to.

        The Blue light call handling is something that should be state run/public, not in private hands. All providers would have to be legally obliged to comply with call routing for this. I am sure however that this and many other “look at all the good things we do” arguments will be used to try to maintain the status quo.


      • Adrian Wooster says:


        I actually meant USO rather than USC, so my mistake. The universal service obligation to deliver something is an issue – at the moment it applies only to dial tone for an analogue voice service able to support a 28kbps modem, and only to BT. If the decision is that we have a more diverse infrastructure based on a broader range of technologies then the services covered by universal obligations need to be reviewed and there will need to be a new mechanism to ensure that no-one is left behind if BT isn’t the prime infrastructure operator in an area.

        In working out how to handle this naturally leads to if and how we as a country might start to manage a copper switch-off process.


  2. Bill Lewis says:

    Hi Adrian,

    The idea of breaking up BT seems more horse already bolted, gate closed to be honest.

    The monopoly that is BT has been fed and nurtured by government to the tune of Billions, they still think it is the infant GPO they used to babysit all those years ago unfortunately.

    To now consider they should break things up or in any way stop spoon feeding an already overweight and spoilt child would only result in a serious tantrum/screaming fit from it.

    The resultant dispersing of toys would only cause government to rush back armed with a range of pacifiers to keep the peace.

    What you do in this position I equally do not have a clue. As you state it would take a long time to wean BT of its dependency and restore some discipline to the extent that other providers outside their cot get more than the odd morsel tossed their way and don’t end up buried under heavy piles of tantrum derived building bricks!

    Where is a super nanny when you need one?


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