The chancellor, Gordon Brown, found himself at the centre of a row between British Telecom and Oftel yesterday after leaking a speech which disclosed plans by the regulator to open BT's local network for competition earlier than previously agreed.
Excerpts from the speech wiped billions of pounds from the market value of BT in early trading after they were published in the Financial Times.
The share price movement caused the stock exchange to take the unprecedented step of calling on the Treasury to publish the speech in full - it appeared on the exchange's regulatory news service in the early afternoon.
Oftel, it emerged, is poised to appoint outside consultants to examine ways of bringing forward the previously agreed date of July 2001 for BT to give up its monopoly of the "local loop". BT shares closed 42p lower at 971p.
BT's chief executive, Sir Peter Bonfield, reacted angrily to the suggestion and the way the news was released. The episode seems certain to chill relations between BT and the regulator, which had improved with the departure of former Oftel chief Don Cruickshank.
"BT shareholders own the network and BT not only needs to be consulted but to agree any timetable with Oftel," Sir Peter said. "We have already agreed with Oftel a deadline of July 1 2001 and there will be no change to this date without our agreement. That would, anyway, be a matter for Oftel and BT - not for the treasury."
Mr Brown met with Oftel director general David Edmonds on Tuesday where they discussed ways of increasing internet penetration in Britain. Mr Edmonds is understood to have asked for Mr Brown's support in bringing the deadline forward but could have exposed the government to accusations of meddling.
The aim of opening BT's so called local loop to competition is to accelerate investment in the network to upgrade it for broadband applications including high speed internet access. That can be achieved by a new technology called ADSL (asymmetric digital subscriber line) which supercharges existing copper wires.
"I know that Oftel believes this timetable can be improved," Mr Brown said in the speech delivered to business leaders at the Smith Institute in London last night. "Let the industry be in no doubt that I stand full square behind Oftel in these aims. We will not al low any foot-dragging here." Five European countries have already "unbundled" the local loop - Austria, Denmark, Finland, Germany and the Netherlands.
Separately Mr Brown set targets to reduce the cost of internet access in Britain to US levels by 2002 and warned that regulatory action could be taken if prices do not fall.
The cost of peak-rate charges in Britain remains roughly 20% higher than Italy, 50% higher than the US and 100% higher than Canada, according to government figures.
The statement attracted further barbed comments from BT which is planning to launch an unmetered internet access product in the spring. "BT has had its Surftime package - the UK's first unmetered call package - on the table since December," Sir Peter said.
Net costs
BT: weekend 1p a minute, evenings 1.5p a minute, daytime 4p a minute (before Friends and Family discount)
NTL: 1p a minute at all times.
CWC: 0.6p a minute to 1p evenings and weekends. Daytime 1.8p to 3p a minute.
Telewest: £10 a month for unlimited access.
Modems: Standard phone line: up to 56kb. ISDN line: 64kb. Cable modem: 500kb to 2mb. ADSL: 2mb. Current Wap phones: 9.6kb. GPRS: up to 114kb. UMTS: up to 2mb
