The question of whether to break up BT Group has long loomed on the telecommunications horizon. But following the publication today of Ofcom's much-trailed review of telecoms regulation, it is clear that the regulatory sledgehammer is to remain safely in the toolbox. More subtle methods will be used to crack the shell of the dominant player and release much-needed competition into the marketplace.

For some time, the European Union's competition authorities have expressed concern that the formerly state-owned telecoms giants whose monopolies were broken by privatisation have continued to exercise market power and to hamper competition. New entrants have been denied a level playing field because the incumbents still dominate the local loop, the junction boxes between houses and the local exchange.