In a consultation document, Oftel considers the case for regulatory action with five options suggested to enable suppliers competing with British Telecom to gain access to the customer.

Currently BT provides the "local loop" connection from households and businesses to the nearest exchange in 85 per cent of cases.

Oftel wants competition and choice

Oftel says it wants to ensure competition and choice in new broadband services. "If we identify that there are obstacles to the delivery of these services we shall consider regulatory action to remove them," said its Director General of Telecommunications David Edmonds.

"I believe that competition is the best way to satisfy consumer needs and so I am concerned with barriers to effective competition."

The report suggests there could be "Local Loop Unbundling" - the transfer of control by BT of individual lines to a competitor.

The local loop usually consists of two copper wires. The development of Digital Subscriber Loop (DSL) technologies has made possible the high-speed transfer of data over copper at rates of around 2Mbit/s, or at around 50 times the speed of a 56k modem, which generally operates at less than 45k a second.

BT seen as slow to innovate

BT has been criticised by consumers for its slow introduction of affordable ISDN lines to speed communications. It launched a cheaper ISDN service, Home Highway, this year and has just begun ADSL (Asymmetric Digital Subscriber Loop) trials in North London.

Other options for Oftel regulation include bitstream access, where BT would have to attach equipment to a line leased to another operator and indirect access, which would mean BT operating a higher bandwidth public network with competitiors allowed access.