The received wisdom here in the U.S. is, according to Gregory Sidak of Georgetown, that prohibiting telecommunications companies from entering vertical markets is a bad idea:

In general, statutory barriers to entry are strongly disfavored by scholars of regulatory economics.  In practice, they are surprisingly costly to implement in technologically dynamic industries, they invite abuse through rent-seeking behavior, and they run the risk of harming consumer welfare.

Well, the EU telecom commissioner, Viviane Reding, has a different point of view.  She thinks that functional separation (separating a communication company's transport functions from its content dreams) leads to competition, faster internet access speeds, and better communications for consumers.  According to the Financial Times, she views the British Telecom split between "networks" and "services" as a positive development.  Her office has already sued Germany for letting Deutsche Telekom get away with vertical integration. 

No stranger to controversy, Ms. Reding has a remarkably consistent method...First, she outlines outlandish ideas then waits for the air to clear before returning to the table to get a deal.

Calling this "outlandish" may indicate that the Financial Times itself is a little distant from the fray.  These are serious economic questions, and Japan certainly takes the notion of separation seriously -- at least on the DSL side of things.

===And today I went for the first time to the Ann Arbor Bim Bi Bop lunch, organized by the well-connected Ed Vielmetti.  At least 30 people, in all kinds of technology-related walks of life.  The introduction ceremony involved telling people how you could tell that the summer was ending.