The problem I have with this is that Openreacch (the part of the now private BT group that owns the copper lines, not Bt wholesale or Bt Retail) have a monopoly on the cable.
You can choose someone like Talk Talk or Sky and ditch BT Retail and Wholesale but you can't choose to get rid of Openreach unless you get Virgin.
This is the crux of the problem, we have 1 company owning all the phone lines, this is because it was nationalised and then privatised.
working for an ISP I can honestly say Openreach are the problem, the engineers arn't all bad but their systems and procedures are just dire. they can't do anything other than the most basic stuff without the fault being escalated about 4 levels to someone that knows how it works. but there is no other option.
While they have this monopoly they also have a Service Obligation for telephone which Virgin do not so good in some ways, bad in others.
I would like virgin to be in on this aswell, if they provide fibre then they get some money but there is no chance of them meeting any kind of service obligation so it would then be unfair on openreach.
With regards to Labour and wasting money. Yup they will probably spend it on other things but the tories have said they will axe it when they win but yet BT have already committed to 40% fibre to the cab/home by 2012.
Copper is now actually more expensive than fibre so in some ways it isn't that much of a bad move economically for the company, however when you have no competition who cares, do what u like.