DTI stands back in BT's watchdog row

The DTI will not intervene in the long-running row between BT and Oftel, the telecommunication industry's regulator, over proposals to increase competition powers before the company holds a crucial board meeting next Tuesday.

The President of the Board of Trade, Ian Lang, is considering whether to give BT a right of appeal against the plans, which would enable the Oftel director-general Don Cruickshank to ban any activities he considers to be anti-competitive.

But a source said a decision was "not imminent" and would not be dictated by BT's timetable.

The 13-member BT board will decide at next week's meeting whether to reject the proposals, risking a costly and time-consuming investigation by the Monopolies and Mergers Commission.

BT lawyers are working on the alternative strategy of seeking a judicial review into whether Mr Cruickshank is exceeding his powers as a regulator.

Leading telecoms lawyers have backed the idea, arguing that Oftel is going beyond the 1984 Telecommunications Act which laid down the regulatory framework. The Act puts Oftel on an equal footing with the main competition authority, the Office of Fair Trading.

"Don Cruickshank can only go so far in proposing modifications to BT's licence," said David Kerr, a telecoms expert with the solicitors Bird & Bird.

"There's no provision in the legislation for this and it's up to Parliament to decide." He stressed that similar powers exercised by the OFT did include a right of appeal.

Oftel has linked anti-competitve powers with a new pricing formula which excludes business customers from a price cap, and has insisted that the two issues cannot be considered separately.

The outcome of a court challenge would have far-reaching implications for the regulation of other privatised utilities.

Separately, Oftel held further meetings with BT yesterday to complete its investigation into allegations of "dirty tricks" against the cable industry. A formal statement is expected from the telecoms regulator as early as today.

Cable operators have complained that ex-directory cable customers had been marketed by BT staff under the controversial Win Back campaign, in a breach of the Telecommunications Act on the use of privileged information.