Oftel toughens stance on BT

BT faces a fresh round of controversy over plans by the watchdog, Oftel, to acquire far-reaching new powers against anti-competitive practices. The regulator is understood to be toughening its stance on potential abuse by BT of its market position and, unless the company agrees the changes, the matter will be referred to the Monopolies and Mergers Commission.

Don Cruickshank, director-general of Oftel, is expected within weeks to issue a document setting out plans for a general condition in BT's licence and those of its rivals that would enable him to pinpoint anti- competitive behaviour and order it to stop while an investigation is conducted. It would replace the complex and growing series of individual licence conditions relating to competition. Equally important from the point of view of BT's rivals, it would end a situation in which alleged anti-competitive behaviour can continue until the case is proven.

Oftel has been consulting on the proposals for months and BT has been lobbying fiercely for them to be watered down. In particular, the company has complained that one individual - Mr Cruickshank and his successors - would have sweeping power as judge, jury and executioner and that BT would have insufficient right of appeal.

Industry sources say that Mr Cruickshank, far from being swayed by BT's arguments, has dug his heels in. He believes that as BT provides an ever- greater range of services as well as owning and operating the network, there has to be a solid competition framework to protect BT's customers and rival service providers. Sources at Oftel have also pointed out that the proposed sanctions against abuse of power are little different from those that BT would like to see in place in other countries where it operates, or plans to do so.

That argument has done little to console Sir Iain Vallance, BT's chairman, who has accused Mr Cruickshank of having "ambitions to become an untrammelled competition authority as well as a regulator".

In a recent speech he said: "It is my belief that the director-general's current proposals presage a highly dangerous new form of regulation, with broad and undefined discretionary, or absolute, powers vested in a single individual."

The watchdog is thought not to be impressed by such public attacks. He may, however, go some way to meet BT's concerns on the definition of abuse of power. Sir Peter Bonfield, BT's chief executive, said in an interview earlier this month: "What we cannot accept is having Oftel decide what is anti-competitive without knowing what that may be. It is not an environment in which you can make decisions because the rules might change."