The basic issue comes about because broadband service is an add-on to a phone line, and so to get broadband you need to also have a phone line (from same or different supplier).
Many people do not want to have to buy a phone line - they may use mobiles, VoIP, or even have ISDN lines still but simply do not need a phone line and are somewhat aggrieved at having to pay for something they do not actually want (phone service) in order to get something that they do want (DSL).
So the idea is that naked DSL is simply buying ADSL/VDSL with no phone service involved.
However, DSL does still need a copper pair.
Now, one way this may be achievable is a new service BT are considering which appears to be a connection to the FTTC cabinet and not a phone service. I think it may still have a pair back to the exchange for testing, it is not clear. In any case, if and when BT do offer this, we'll be trying it out and selling it, especially if any cheaper.
At the other end of the spectrum is something A&A have done for a while which is offer a no calls phone line with the broadband service. But this is buying a phone line from us, and has a dial tone. We even allow free calls to be made and incoming calls. Something like a quarter of our broadband services are provided with a phone line in this way.
The problem is, for us, is that selling a crippled phone line service is not nice - people often want calls on it, now that they have it. We are not really in to selling phone lines at this stage, and so what we really want is something closer to selling naked DSL.
So, to start with, we are stopping calling it a "phone line" - we are now calling it a "dedicated broadband only copper pair". We are also removing the dial tone and not allowing calls in or out at all. Don't worry, existing lines won't be changed, just new services.
Now, we had something like this before, when we first started - i.e. a line with no dial tone. It caused a slight snag in that a silent copper pair is liable to get nicked by a lazy engineer installing someone else's line or fixing a fault somewhere. It is not supposed to happen, but we have seen it many times. This is why we now ensure the line has a dial tone. Even so, we have had cases of pairs nicked because the engineer tried calling 123 (speaking clock, and chargeable call) and when that failed he assumed it was not a live service, and nicked the pair!
To solve this we think we have finally found a way to include an audio message on the line which says it is a dedicated broadband only copper pair, and even goes on to do a quiet line test (a useful diagnostic when there is a fault). No dial tone. No calls in or out. But it does have audio to tell the engineer not to nick the pair!
The end result is something pretty close to "naked DSL" at last, a way of having DSL without a phone service. On Home::1 we only charge £10/month more for it, which is not bad for the copper pair, and no messing with a minimum term, etc.
We're testing this new system this week and hope to have it for new lines very soon. At the same time we have reduced the install price for new copper pairs to closer to the cost price. We see the copper pair simply as a way of getting the broadband business.
Of course it totally breaks OFCOM's new broadband / line migration rules, but that is another matter. I'm sure we'll sort that out in due course.
Update: Given some of the comments, it is worth explaining that, as ever, we can be a bit flexible on this.