British regulator Ofcom floats the idea of BT spinning off its Openreach network division in response to calls from rivals Sky and TalkTalk.

London - Britain's dominant telecoms provider BT could be broken up under a proposal from the regulator, after rivals accused it of abusing its market power to favour its own services at the expense of others who rely on its network.

Regulator Ofcom floated the idea of BT spinning off its Openreach network division in response to calls from rivals Sky and TalkTalk who want an independent operator of the country's biggest copper wire and superfast fibre broadband networks.

The regulator said the current system, whereby the 169-year-old BT operates Openreach as a separate unit, had delivered real choice, quality and value for phone and broadband customers over many years.

But it said that although the incentive for BT to discriminate against competing providers could be limited by regulation, it could not be removed entirely.

Forcing BT to divest Openreach is one option being considering by Ofcom in its biggest review of the British communications in a decade.

Others include retaining the current model, and using new or existing market powers to address any concerns around competition.

BT said the status quo was working for customers, who had seen services levels and speeds improve and prices come down.

“The model works, we have got the most successful broadband market in Europe - that's Ofcom data - and we are proposing that it will stay that way by investing in ultrafast (broadband) and we are the key to doing that,” Chief Executive Gavin Patterson told BBC radio.

Pay-TV group Sky, however, said it welcomed the focus on Openreach in the review.

“For too long, consumers and businesses have been suffering because the existing structure does not deliver the innovation, competition and quality of service that they need,” said Mai Fyfield, Sky's chief strategy officer.

TalkTalk has said the current market structure was not fit for purpose, and BT's proposed acquisition of leading mobile operator EE would only increase its dominance.