Prices for leased lines offered by BT are too high, and additional regulation may be necessary to force prices down, according to the telecommunications regulator.

BT is not offering suitable competitive pricing for its wholesale leased lines, the Office of Telecommunications (Oftel) said today, adding that it plans to step in to regulate wholesale prices.

Although wholesale prices for leased lines - the permanent data or voice connections used predominantly by business subscribers - were found by Oftel to be in line with "average European prices" they are still "much higher than those in the cheapest countries and in the U.S.," David Edmonds, Director General of Telecommunications for Oftel said in a statement.

Oftel may "set and control the prices of the wholesale terminating segments to be offered by BT," while at the same time encouraging commercial negotiations between BT and its wholesale customers, it said in a statement.

Oftel will seek to strike a balance between acting as mediator in disputes between BT and its wholesale leased line customers, and "taking action on its own initiative rather than waiting for a dispute to arise."

Oftel's proposals arise from its review of competition in the market for national leased lines. Consultation on the plans continues until mid-November, when firm conclusions will be published.

The regulation of both leased lines and local loops is currently under consideration by the European Commission. In July, the EC unveiled plans for a light regulatory framework for telecommunications in the European Union.

Last week both AOL U.K and AltaVista blamed BT for the U.K.'s lack of flat-rate unmetered Internet access for consumers.