Ian Livingston, the new chief executive of BT Retail, has accused Charles Dunstone, the founder of Carphone Warehouse, of "shady practice" over the entrepreneur's sales methods.
A dispute has erupted over TalkTalk, Mr Dunstone's home-phone service which was launched by Carphone Warehouse last year in fierce competition to BT. Mr Livingston has taken the step of making an official complaint to Ofcom, the industry regulator, over TalkTalk's methods and a formal investigation into the matter is under way.
TalkTalk offers home-phone users a rival service to BT's, which provides cheap calls. However, TalkTalk also intends to take over the provision of line rental from BT, in effect ending any relationship BT has with a customer. It is the methods used by Carphone Warehouse to migrate customers off existing BT line rental agreements on to TalkTalk's "wholesale line rental" agreements that have triggered the dispute.
BT has alleged that TalkTalk's customer agreements are unfair because they include a "negative opt-out term" which allows TalkTalk to move customers without their permission. Mr Livingston said: "These clauses are unfair on customers and are a shady practice. I am surprised they would ever be considered by a major industry operator."
The row centres on a clause in the TalkTalk contract, which says that in future the company will be able to take responsibility for a customer's telephone connection, including the billing of line rental. It says TalkTalk will write to customers, notifying them of such a change.
"If we do not receive written notification that you do not want us to take over responsibility for your telephone connection in this way, we will notify you of the date on which such a takeover will take effect," the clause states.
A spokesman for Carphone said: "What Charles [Dunstone] is saying is if you buy TalkTalk it states explicitly that line rental will be delivered when available. It is a positive thing, not a negative. In addition to that, when line rental becomes available Carphone will be writing to everyone to confirm that they would like to have it."
Some industry observers claim that since Mr Livingston took over the job of running BT's biggest division from Pierre Danon, the company has become more "frosty" in its relations with competitors.
However, BT is battling to protect its legacy domestic fixed-line business and has started to show success in slowing the decline in customer numbers.
Ofcom said it had received a complaint from BT relating to a term in TalkTalk's consumer contracts. "BT's allegation is that such a term is unfair for the purposes of the Unfair Terms in Consumer Contract Regulations 1999. Ofcom has opened an investigation to determine whether the term in question in TalkTalk's contracts may be unfair," the regulator said.