The Commons Public Accounts Committee said that the watchdog had not been proactive enough in rooting out anti-competitive behaviour in the phone industry.
While companies such as BT had vast resources and expertise to call on, Oftel lacked staff with commercial experience or knowledge of competition legislation. Even though anti-competitive behaviour often resulted in higher prices, poor service and less choice for consumers, only 10 per cent of the investigations were initiated by Oftel, the committee claimed in a report published today.
In 217 investigations into unfair competition between 1995 and 1997, just 8 per cent resulted in formal enforcement action. Worse still, just 18 of the watchdog's 180 staff worked on competition issues, the MPs said.
Committee chairman David Davis said that regulation could only be effective where the skills of the regulator matched those of the regulated.
"Since the industry has so many more resources than the regulator, the quality, experience and training of the regulator's staff are of paramount importance," he said.
"Such staff should be well trained and include some who are familiar with the way commercial organisations work. In such 'David and Goliath' situations, we need to make sure that David is well-armed."
The committee also warned that it remained concerned about the price of BT's ISDN lines, increasingly common phone connections that allow computerised information to be sent at high speed. A spokesman for Oftel said that its director general, David Edmonds, had already launched a review of all aspects of Oftel's organisation and funding which is due to be completed in early Autumn.