Telco watchdog Oftel yesterday set out service level agreements that BT must offer to rival telephone operators, in what seems to be yet another attempt to push forward the thus far sluggish process of local loop unbundling.

At present consumers have little choice as to which operator supplies their high-speed connection due to the slow rollout of exchanges.

BT has blamed lack of demand — a claim which has since been lambasted by rival operators that wanted to benefit from LLU but simply could not afford to or were in areas where BT exchanges had not yet been made available.

This is the first time the watchdog has intervened with service level standards and it looks as though BT will be hit hard if it fails to comply. BT will have to pay operators £10 for each working day an unbundled loop is unavailable and for each day's delay in providing co-location facilities.

"BT will agree contracts with operators," said Oftel's director general David Edmonds. "Where it does not meet the timescale, BT will have to pay compensation."

BT said it had expected Oftel's actions and said it was working hard to meet the requirements of rival operators.

Whether the move will mark any considerable change for consumers remains to be seen, but there is now the worry that prices for BT's services may go up to cover the compensation payments it will undoubtedly have to make.