Oftel, the telecommunications watchdog, has proposed a pounds 100m nation-wide fund to ensure access for everyone to the telephone network and a special low-cost deal for schools.
The move appears to leapfrog BT's agreement with the Labour party, announced in October, that it would connect all schools for free in return for assurances that it will be able to deliver broadcast entertainment over the telephone wires. Under Oftel's proposals - part of a wider consultative document on "universal services" - schools would also be entitled to a specified level of service from BT or rival operators at an "affordable and predictable" price.
Don Cruickshank, director general of Oftel, said: "It does not need a deal between BT and the Government of the day. It is wrong in a market which is becoming competitive to lapse back into a monopolistic mechanism. This is the way to it."
Geoff Hoon, Labour's shadow technology spokesman, said that Oftel's plan is a welcome part of a wider debate on access for schools and universities to the information superhighway.
"We have an understanding with BT and that still stands. But the understanding is nothing new and not all that remarkable. The connection is after all the relatively easy part of the process - it isnt an enormous exercise to take a wire up a school drive and connect the school. What is important is what they do with the connection." BT, however, accused the regulator of interfering. A spokesman said: "Our view is that until the market has failed, Mr Cruickshank should not interfere." BT did welcome the broader thrust of yesterday's proposals, which set out a mechanism for all operators to fund - or carry out - the provision of basic services throughout the UK, even where it is uneconomic to do so. At present the responsibility for universal services lies largely with BT.
The plan, which could ultimately result in slightly higher bills for the average customer, includes free selective call-barring for people who who do not have a telephone for fear their bills would soar. It also envisages a service barring all but emergency or operator calls as an alternative to disconnection customers for non-payment.
Under Oftel's proposals, the cost of universal service would be met by a fund of up to pounds 100m annually, about 1 per cent of basic telephony revenues.