Don Cruickshank, director-general of Oftel, said yesterday that detailed regulation of the industry could only be reduced if he were confident that practices that could restrict competition could be controlled.
Launching Oftel's annual report, Mr Cruickshank said that companies hurt by anti-competitive behaviour have to wait too long for action and redress.
His remarks come amid mounting pressure from Mercury and other companies for the introduction of immediate sanctions - including fines to be imposed if a company abuses its market power.
Mr Cruickshank also said that emerging competition in the marketplace was not harming BT. "Quite the contrary. BT remains as profitable as ever and is becoming increasingly confident," he said. He went on to promise that in spite of opposition from BT, Oftel was determined to ensure that customers would be able to keep their numbers when switching from BT to another company.
The regulator said that the introduction of number portability was Oftel's "single most important aim" and that he hoped to see it widely available to customers by the end of the year.
Last week BT refused to accept amendments to its licence that are needed for number portability, and will as a result be referred to the Monopolies and Mergers Commission. The company said that it supported the concept but could not accept Oftel's view that BT should bear the cost.
Mr Cruickshank said that he would start work this summer on a new price control regime to take effect in 1997 when the present cap - inflation minus 7.5 percentage points - expires.
He has angered BT by suggesting that there may in future be different price caps for different services. BT argues that the cap should be removed entirely to allow the market to dictate prices.
Separately, Oftel said it would waive payments called "access deficit contributions" which eight companies would otherwise have had to make to BT when using its network.
These are a special payment by BT's rivals aimed at helping to cover the losses incurred by the company in providing and maintaining local lines, estimated to be about £1.5bn a year.
The companies to be granted waivers until next year include Cambridge- based Ionica, Norweb, Scottish Power and Videotron. At present all companies except Mercury are exempt from paying access deficit contributions.Reuse content