Watchdog pledges to fight BT challenge

Don Cruickshank, the telecommunications regulator, yesterday promised to fight "tooth and nail" a legal challenge to his powers to be mounted by BT.

Mr Cruickshank was commenting on the dramatic events of Friday night, when the BT board finally agreed to Oftel's proposal to take on new powers to ban any behaviour the regulator believes will inhibit competition. The changes are linked to a new price formula for BT, which would restrict increases in domestic bills to 4.5 per cent below inflation until 2001, but exclude most businesses from controls for the first time.

BT said on Friday that it would accept Oftel's new powers, which the company insisted had been revised to meet its main concerns, but added that it would be seeking a judicial review to see whether the proposals were lawful. The BT statement described this move as "uncontentious".

However it was clear yesterday that relations between the two sides have not improved, despite the company's decision to accept the regulatory changes. Asked about the legal challenge, Mr Cruickshank said: "I think they're wrong to do so and they'll lose, but it's their privilege." He continued: "I'm going to fight them tooth and nail."

BT said the legal challenge was purely to clarify the situation. It will examine whether the regulator is exceeding his responsibilities by taking on extra powers. It will also question whether Oftel was right to link the regulatory condition with price controls.

Oftel also cast doubt on the significance of the concessions "won" by BT, which were announced after an eleventh hour meeting between Mr Cruickshank and BT's chief executive, Sir Peter Bonfield.

The anti-competitive powers will not come into force until December, later than originally planned. Oftel will also set up an advisory panel to examine disputes, though its rulings would not be binding.

Mr Cruickshank admitted the advisory panel was "bound to be a constraint" but insisited it did not amount to even a "semi-court of appeal." BT's main criticisim of the fair trading powers has been that they include no formal right of appeal against Oftel's decisions. Last year the BT chairman, Sir Iain Vallance, went as far as to describe the proposals as "extremely dangerous".

BT yesterday said the judicial review was purely to clarify the situation and would take place in the autumn. The company also wants the Government to change the law to include a right of appeal in Oftel's fair trading powers. BT said it hoped this would happen by the year-end, but analysts regard this timescale as optimistic.

Any changes to the law would be hit by the lack of Parliamentary time and the approaching General Election.