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Oftel gains new powers starting March

The watchdog gets its teeth back but claims it is evolution not revolution that will alter the telecoms market
Written by Jane Wakefield, Contributor

Just a month after telecoms watchdog Oftel announced it was relaxing its regulatory role, the government has given it greater powers to control BT's monopoly.

Until now Oftel has only been able to request information regarding anti-competitive action or abuse of monopoly. From 1 March, amendments to the Competition Act will allow the watchdog to demand information and impose fines of up to 10 percent of BT's annual turnover if it is deemed anti-competitive. Oftel hopes this will be enough to keep BT in order. "The fines could go up to £2bn, which is extremely hefty. These fines could be put in place or they could lose their operating licence," an Oftel spokesman explained.

However Oftel has no current plans to impose penalties on BT, describing necessary changes in the telecoms market as "evolution not revolution". Adam Daum, senior analyst with research firm Gartner Group does not agree. "Things are moving in the right direction but people are frustrated at the pace of change," he said. However he confesses some sympathy for the watchdog. "When you have a dominant player it takes decades for the landscape to change," he said.

Daum thinks large financial penalties would damage BT, but doubts Oftel's ability to bring an anti-competitive action. "As a threat, a fine is very important but the whole point is whether they could make it stick," he said.

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