Oftel yesterday announced an investigation into the pricing of British Telecom's unmetered internet access, invoking for the first time the powers it won under the 1998 Competition Act.
The investigation centres on two new packages which BT had lined up for launch at the end of this week. Oftel's inquiry will focus on whether the packages are anti-competitive. The regulator has the power to fine BT up to 10% of its annual turnover.
The packages are BT Surf Together and BT Talk & Surf Together. The first offers unlimited weekend and evening internet calls for £14.99 a month while the second also bundles in unlimited weekend and evening local voice calls for £19.99. The second package had already been lifted from £17.99 a month following discussions between BT and Oftel.
The watchdog said it welcomed lower prices but needed to ensure that BT was not undermining competition. Director general David Edmonds, it noted, suspected that BT was subsidising its unmetered internet access by the voice call element of the packages.
BT chief executive Sir Peter Bonfield said: "We strongly resist the suggestion that we are acting anti-competitively. All we are trying to do it give our customers value for money."
A BT spokeswoman said that the company was bemused by Oftel's decision to investigate. "We believe this is the kind of package that consumers, the government and Oftel have been telling us they want. They have known about this pricing since October and known of our intent for longer than that."
She said that the company intended to push ahead with the launch on Friday. The investigation marks a new low in relations between BT and the watchdog. Mr Edmonds said last week that dealing with the monopoly was akin to trench warfare.
Oftel yesterday published the procedure to decide how space in the most popular BT exchanges will be allocated to rival suppliers when its local network is opened for competition next year.
Competing operators will be asked to list the exchanges in which they wish to install equipment in order of priority. The higher a named exchange is on the operator's list, the more likely it will be to gain entry.
BT meanwhile signalled its intent to press ahead with the £5bn flotation of its directories and e-commerce business Yell when it named the chief financial officer who will lead the company to market. John Davis is joining Yell from internet portal business Yahoo! Europe where he was group financial officer.
The partial flotation of Yell will be the first stage of a broad restructuring of BT designed to restore investor confidence and reduce debts of £30bn.
The appointment of Mr Davis suggests that BT is undaunted by the volatility of the markets and, more particularly, the sharp change in sentiment toward internet-related new issues. The company is aiming at flotation before the end of March.
The share price closed 9.5p higher yesterday at 660p but are still lower than the 749p on the day the restructuring was announced. At the beginning of the year, BT shares were worth £15.13.
