Alternative UK carrier, Telco Global Communications, has accused BT of playing dirty tricks in an effort to dissuade customers from moving away from its service.
The accusations centre on carrier pre-selection (CPS), a service that allows users to change telecom supplier without having to install a new line or needing to dial a prefix to get onto the new network.
Dr Engin Mumcuoglu, joint MD at the alternative carrier, accused BT of "deliberately cancelling account applications" in some circumstances and cited 150 rejected applications in the past two weeks.
A BT spokesman said: "These are clearly serious allegations being investigated by Oftel. We will respond once they have made those allegations."
Watchdog Oftel confirmed it had received a letter last week from Telco Global Communications but not a formal complaint. A spokeswoman said, "We've addressed the concerns laid out in that letter. So as far as we're concerned that's the end of the matter unless they put in a formal complaint. The ball's in their court."
Dr Mumcuoglu responded: "If they want us to put in a formal complaint that's what we'll do because it's a really serious matter."
Telco Global Communications has been operating in the UK since 1996 and claims to have 750,000 residential and small business customers.