A senior advisor to the prime minister has denied claims that government policy has left the UK "sleepwalking towards a broadband monopoly", with BT's power over the local loop giving it no reason to innovate.
A report from think-tank Demos suggested that control of BT's local loop should be handed to a not-for-profit company that would maximise access to all telecoms service providers and increase network innovation.
Demos admitted that there may be short-term advantages in allowing BT to roll out broadband as quickly as possible, but that there are longer term risks.
James Wilsdon, the report's author, said: "The UK is sleepwalking towards a broadband monopoly, with little opportunity or incentive for innovation within the network.
"The government has consistently ducked this issue and tackling it should be a top priority for Ofcom from the start."
But Ed Richards, senior policy advisor to Number 10 on internet and IT, said: "To say we are heading for a broadband monopoly just cannot be supported by the facts."
He explained that in France and Italy the incumbents hold around 70 per cent of the broadband market, and that in Germany the figure is around 98 per cent.
"In the UK it is quite different," he said. "BT has about 30 per cent of the market and BTopenworld has 20 per cent. That's more competition in infrastructure and retail than anywhere else."
But Richards admitted that there is no room for complacency. "We launched broadband too late and we have to tackle the digital divide," he said.
"Investing in IT will never be enough. You have to combine it with the right skills base and organisational change."
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