Ofcom do allow BT in, its BT's choice not to offer any services in Hull along with all the other providers, there is nothing to stop anyone else coming in, if you look through some of the other threads here, there are plenty of stories from the local press and from Ofcom's reports about how there is nothing stopping another provider coming in. Cable providers can't provide here as the infrastructure isn't in place for them. In reply to if so many people in Hull don't want /like the situation, I don't think people are going to leave themselves without any broadband service on the hope it might encourage someone else to come in. People are opting for mobile broadband for an alternative and leaving KC for this, but while this currently has limitations in terms of network coverage and download restrictions its not viable for a lot of people, so currently have no other choice than to use Karoo's services.
Having listened to the various arguments for a year or so heres the situation as I see it.
I dont believe Ofcom would allow BT in as BT has significant market power in the UK. I believe Ofcom would be likely to take action against BT if they attempted to take over the Hull area as they would consider it somewhat ironically a monopolistic action.
Ofcom do state however that KCOM have to open up their network to any other provider. KCOM do open up their copper lines to other providers on broadly similar terms and costs to BT. Other providers dont choose to operate service in Hull however as there is no easy way for them to connect the lines back to their own networks and then back to the internet without going through KCOM and paying a fortune to rent fat pipes of them to do so.
So you could say its a bit of a catch 22 situation.