We have one of the most competitive telephone services in all of Europe. It beggars belief that these statements are being made - they are just not true

Oftel director general David Edmonds

An unnamed source at the Treasury told the Financial Times that Oftel is widely viewed as being under BT's thumb.

Oftel's detractors say it has not done enough to force BT to offer competitors access to local telephone exchanges, crucial if these companies are to be able to offer high-speed internet access.

The telecom giant denies dragging its heels so it can maintain an advantage over its competitors.

Olli Rehn, an adviser to Europe's e-commerce commissioner, said that in the field of telecoms regulation, the UK has 'relegated itself from the premier league to the relegation zone of the second division'.

Dismissed

Oftel's director general David Edmonds has dismissed the criticisms as 'nonsense'.

Speaking on BBC Radio 5 Live's Financial World Tonight programme, he said: "An anonymous attack by any official of a Government department is not worth responding to. It's reprehensible.

"We have one of the most competitive telephone services in all of Europe.

"It beggars belief that these statements are being made - they are just not true."

Asked about accusations that he had hindered growth of internet services, he replied: "It's absolute nonsense."

Mounting pressure

Pressure on Mr Edmonds has been growing since RSL Communications pulled out of the bidding process for high-speed internet links earlier this week.

The company accused the regulator of failing to ensure fair play for rivals to BT.

US telecom giant WorldCom, which had been expected to spearhead the drive towards broadband net access, also pulled out of the bidding.

It denied reports that it was 'frustrated' with Oftel.

Competitors will now be able to come to me if they feel there is a problem and I will have the power to force BT to comply

David Edmonds

Oftel's new powers

The regulator does however admit that BT's actions have not so far met with its requirements.

Oftel has now been granted powers to speed up the 'unbundling' of local telephone networks and ensure BT provides a level playing field.

BT engineer at work in an exchange

Mr Edmonds told BBC News Online: "This doesn't necessarily give me confidence that this will bring an end to BT's obfuscation.

"But the competitors will now be able to come to me if they feel there is a problem and I will have the power to force BT to comply."

So far, 28 companies have been granted access to 380 of the less popular exchanges, mainly in rural areas.

The real problems are likely to begin in December, when more popular exchanges are set to be made available and demand for space starts to outstrip supply.

Constant rows

Mr Edmonds has been given the job of coming up with a formula for deciding which companies are given access, after the companies themselves failed to reach agreement.

There is no way BT has been blocking the process and we are currently on time to deliver to the agreed timescales

BT

BT continues to deny that it has benefited from the rows over unbundling.

"Oftel has set the timetable for conversion not BT - and it is a tough one," a spokesman said.

"There is no way BT has been blocking the process and we are currently on time to deliver to the agreed timescales."