Oftel has strongly denied media reports that it is so badly mishandling its efforts to speed deregulation in the Internet sector that senior government officials no longer trust the agency to promote Internet growth in the U.K.

"As far as Oftel is concerned, we totally refute the charge that Oftel has stifled the growth of Internet services. On the contrary, the U.K. has led the way in promoting cheap Internet access in Europe," said an Oftel spokeswoman.

Oftel determined last November that BT has a monopoly on the local network lines and directed the telecommunications operator to lease the local loop.

At the time, Oftel directed BT to upgrade the local loop to handle new broadband digital services for faster Internet connections, to encourage competition.

Since then, Oftel has weathered heavy criticism over its handling of its time frame for the unbundling of the local loop and now David Edmonds, director general of telecommunications for Oftel, is being pressured to step down by officials within the government.

The Oftel spokeswoman asserted that Oftel is not dragging its feet on local loop unbundling and that it was holding to its timetable.

Last March, Oftel director of technology, Peter Walker, stressed that the unbundling of local network lines in the U.K. cannot be completed before the July 2001 deadline.

Edmonds also talked tough in an official press release issued on Friday but did leave a door open to further delay. "Only in exceptional cases, where there are significant problems outside BT's control will BT be allowed additional time," Edmonds said

According to a report in the FT, even officials in the European Union are becoming concerned about the U.K.'s sagging competitiveness in the Internet market, which has dipped behind France.

"The UK has relegated itself from the premier league (of European telecoms regulation) to the relegation zone of the second division," said Olli Rehn, head of cabinet for Erkki Liikanen, European information commissioner, in the report.

"Things have moved quite fast in other member countries. The U.K. was in the vanguard of telecoms liberalisation but has slipped substantially in recent years," Rehn is quoted as saying.