Oftel has fallen foul of European law for a second time as the EC this week takes action on the watchdog's regulation of the fixed line market.
Oftel already faces the wrath of the EC for taking too long to respond to complaints about anti-competitiveness in the mobile market. This time it could find itself in trouble for "failing to meet its obligations" in the delivery of carrier pre-selection. This service allows users to pre-select alternative operators to BT for Internet, voice or international calls without having to dial a code.
According to Karen Hardy, head of regulatory affairs at telco Energis, the EC is concerned about the slow rollout of the service. "The Commission now believes Oftel hasn't been working fast enough," she says.
Oftel is baffled. "They [the EC] have written to us, telling us they are launching proceedings," confirms a spokesman. "But we believe the UK is fully compliant with our obligations to enable service providers to offer carrier pre-selection. It may be because, although BT has fulfilled its obligations, there are no services available. Nobody has taken it up."
BT is also confused by the EC's latest action. "We have done all we have been asked to do by Oftel and we have had the service available since 1 April," a spokeswoman says. However she admits the service is only an interim one.
"We don't have a permanent solution in place. By the time the software standards were set, there wasn't time to set it up," she says.
In a twist to the plot, BT is also considering legal proceedings against Oftel over the pricing arrangements for carrier pre-selection. "BT has applied for permission to launch a legal challenge as they feel the 50/50 costings [where the alternative telco shares half the revenue of calls] is unfair," reveals an Oftel spokesman.
The EC has been getting increasingly tough on European incumbents, regarding a competitive telecoms market as essential for Internet and e-commerce to thrive in Europe.
European leaders made their commitment to unbundling -- which would effectively end the monopoly of incumbent telcos across Europe -- at an EC summit in Lisbon in March when they signed an agreement for unbundling to be put in place by the end of 2000. Britain's prime minister Tony Blair was among those who signed up to this.
Europe is planning to rush through an unbundling directive which would give weight to the recommendations made in Lisbon. Head of regulatory policy at telco GTS, Iain Osborne, believes this could put Oftel in breach of EC rules for a third time as the watchdog has agreed to BT's July timetable -- six months behind the EC recommendation. "Arguably Oftel is already in breach. A directive will make it even more flagrant," he says.
Osborne is not impressed by the way Oftel has handled the wholesale rollout of DSL services, which is seen as a stop-gap towards unbundling. From July of this year BT is obliged to offer other operators access to lines to provide broadband services like its own BTopenworld.
"It is being rolled out piecemeal and only in the exchanges that BT chooses. By rolling it out like that, BT is slowing it down and Oftel is not being sufficiently active," says Osborne.