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British Telecom Chairman Says Open Access Key to Broadband Growth

Five years ago, Britain's largest telecommunication's service provider was forced to do what at the time seemed like a losing proposition. Regulators required BT, formerly called British Telecom, to open its networks to competitors to lease, and for use by any device and software application.

By doing so, BT and many analysts at the time predicted the company's demise, saying it would lose its monopoly power over the industry and its revenue streams from proprietary hardware contracts. The company would become a network of dumb pipes, some feared.

Today, BT generates annual revenues of about 20 billion British pounds, the same as five years ago. What's different is that many more competitors have entered into the wireless, phone, and broadband Internet markets in the U.K. The average speed for broadband access has nearly doubled to 2 megabits a second and the price for service has been reduced by an average of 50 percent from five years ago.

And BT ? It was forced to reinvent itself and be more aggressive with new technologies like its current buildout of fiber optic networks across the U.K., said Sir Michael Rake, chairman of BT, in an interview today.

"It was painful at the time but has been better for the country and consumers in the long run," Rake said.

He believes the lessons learned by BT could be useful for the U.S., which has more telecommunications service providers but is largely dominated by AT&T, Verizon Communications and cable operator Comcast. The best way to get more people to adopt high-speed Internet is to create competition through a regulatory framework that forces the biggest players to open their networks, Rake said.

"There needs to be a level playing field and the simple thing to do to achieve that is to open access," Rake said. "It's the only way to create competition and thereby create investment and jobs."

Some carriers have said they are already moving in that direction. Verizon Wireless launched a developers group that is open to any device or application. Its next generation wireless network, or 4G network, will also be open to any device or application.

But there are still examples of exclusive deals like Apple's iPhone on AT&T's wireless network. Last year Skype filed a petition to the Federal Communications Commission that would require wireless operators to open their network to applications like theirs. Then chairman Kevin J. Martin moved to dismiss the petition, which is still pending at the agency.

By Cecilia Kang  |  May 1, 2009; 4:23 PM ET  | Category:  Cecilia Kang
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