Plans to relax media law to promote competition will not work unless the government gets tough with BT at the same time, MPs have been warned.

It is less light touch and more light the blue touch paper and retire

David Melville, Freeserve

The roll out of high speed broadband services is crucial to the future of Britain's multi-billion pound communication indudstry, David Melville, UK director of internet service provider Freeserve told MPs.

But its progress has been frustrated by BT, which retains a stranglehold on the market, he claimed.

Telecoms regulator Oftel has been widely criticised for failing to prevent BT from exploiting its monopoly of local telephone exchanges and lines, the so-called "local loop".

Scapegoat

Other companies need access to the exchanges to install broadband equipment.

We have made our local loop available to other companies but demand from other companies has collapsed

British Telecom

But Culture Secretary Tessa Jowell's much-vaunted plan to scrap Oftel and replace it with a single "light touch" regulator for the entire communications industry will not improve matters, Mr Melville said.

"It is less light touch and more light the blue touch paper and retire" he told the Joint Communications Committee.

"The slow take up of broadband has been a tragedy for many companies - many of the content companies that were around two years ago that are not there any more."

He added: "We believe we understand where blame lies and that sits very firmly at the feet of BT."

"And unfortunately the emerging approach to what is being described as light touch regulation is making a bad situation worse."

BT claimed Freeserve was just using it as a convenient scapegoat for its own problems.

'Collapse in demand'

"It is a bit of an old chestnut from Freeserve, who have seen fit to criticise BT whenever they are having their own troubles," a BT spokesman told BBC News Online.

Tessa Jowell: Light touch or soft touch?

He said the roll out of broadband had not been slowed down by BT.

It was a commercially-driven process and the demand from other companies to provide services was not there.

BT has converted 1,115 local exchanges for broadband, which meant 66% of households had access to high speed internet services, he added.

"We have made our local loop available to other companies but demand from other companies has collapsed."

Obscenity laws

The Joint Communications Committee, which is chaired by film producer Lord Puttnam, also heard from Microsoft, AOL and other leading players in the industry.

There were several calls for stronger assurances from the government that it will not regulate internet content.

In theory, the internet is subject to the same rules as other media, such as obscenity and libel laws and competition policy, but it is notoriously difficult to police.

The government insists it has no plans to introduce special licenses or rules for the internet at the moment.

Universal access

There was also concern about the government's supposed commitment to universal broadband access.

Simon Hampton, of service provider AOL, told the committee that if ministers wanted every household in the country to have access to high speed internet services it should be prepared to foot the bill.

"Were it to be the case that government wanted broadband penetration to go wider than the market would deliver its unclear why the market should then be forced to do that," Mr Hampton told the committee.

He added: "The government should pay for what the government wants.

"Industry is there to drive the commercial process."