Watchdog's new teeth pose threat to telecoms

OFTEL, the industry watchdog, is to receive dramatic new powers which could undermine the boom in Britain's telecommunications sector.

Legal experts say the Electronic Communications Bill, to be unveiled this week in the Queen's Speech, will allow Oftel to alter the terms of telecoms licences without a firm's consent. At present the licen-ces, which specify what a company can and cannot do, may only be altered with the appro-val of both the company and the Competition Commission.

Dan Tench, a telecoms law specialist at solicitors Lovell White Durrant, warned: "The danger is that if telecoms companies perceive that their operating licences are subject to the wide discretion of Oftel, they will be less ready to invest and soon the UK telecoms market may lose its pre- eminence."

Under the bill, Oftel will be able to alter a number of licences without recourse to the Commission if a "significant minority" of licence holders do not object to the proposed change. And if Oftel believes a rule change is "deregulatory", it could press ahead even if every licence holder disagreed.

Mr Tench said: "Although there is guidance as to what constitutes a deregulatory licence modification, it is up to Oftel to decide. What may seem deregulatory to some may seem burdensome to others."

He is also concerned that the diminution of the Competition Commission's role could lead to a harsher regulatory regime: "In the past, the Commission has toned down licence changes proposed by Oftel and provided a reasonably sensible and independent assessment of what modifications are needed."

The Government's proposals have come in for criticism from a Commons' select committee, which expressed its "unease" at the plans. The Government has argued that it is complying with European law, which insists licences must be non-discriminatory. But Mr Tench said: "Some suspect that the real reason for the change is that Oftel wants greater powers and less safeguards."