BT believes it may be able to limit rivals' access to some of its wholesale broadband network after the European Commission backed a drive to lift regulation of the division in parts of the UK. Brussels endorsed a proposal by Ofcom, the telecoms watchdog, to scrap controls on internet providers in certain densely populated areas where broadband competition is strong.

Under the proposal, operators in areas deemed to be competitive would no longer have to guarantee competitors access and regulated fees in those locations. At least four rival operators should be in place in the chosen regions for such a move to go ahead. Ofcom estimates the area covered by the proposed deregulation accounts for about 65 per cent of premises.

Ben Verwaayen, BT's chief executive, said: "This is very welcome news from the European Commission. Their support for Ofcom's proposal is a step in the right direction."

The news could boost BT's struggling wholesale division. Third-quarter results last week showed revenues at the unit fell 11 per cent to £1.2bn (E1.7bn), as rivals such as Carphone Warehouse and British Sky Broadcasting moved to their own exchanges. This cut the revenues BT accrued from renting its network.

The European Commission insisted that British consumers would continue to be protected by competition rules if Ofcom went ahead with the move.

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