Telco watchdog Oftel said yesterday that it would take a harder line with BT by hitting it with fines if it does not raise its level of service for offering access to the local loop to its competitors.

BT's rivals need access to the local loop, the 'last mile' of copper wiring that connects individual businesses and consumers to the network to begin offering competitive broadband services.

After reviewing a formal complaint made by a number of BT's competitors in May, Oftel has determined that BT's offer for unbundling the local loop has been inadequate, the regulator said in a statement.

Companies such as Scotland-based Thus, WorldCom, Bulldog and Dutch company Versatel have all been vocal in their contentions that BT has been dragging its feet in establishing co-location sites where local loop is being unbundled.

BT's rivals insist that BT's process for gaining access to the last mile has been purposely lengthy, difficult and expensive. As a result, rivals have said that the option of building their own high-speed internet access switching equipment in the exchanges is simply far too expensive.

BT has always strongly contended that it has been following the timeframes and standards set by Oftel and made that same argument on Thursday. Far from impeding the unbundling of the local loop, BT argues it began construction of co-location facilities in April, well before its July deadline, to allow its competitors to install broadband internet access equipment in the most sought-after local exchanges, a BT spokeswoman said.

But Oftel has determined that BT has been manipulating its position as the incumbent to keep its dominance in the marketplace intact. To deal with the speed of BT's unbundling project, Oftel floated the prospect fining BT for every line unavailable to a company applying to take it over. The fine could be as much as £10 for each working day an unbundled loop is unavailable, as well as an additional fine of £80 per day to be paid by BT to each operator for each working day's delay in providing collocation facilities.

BT's local loop has about 5,500 exchanges connecting more than 25 million customers to its network, BT said. BT and other telcos have until 20 September to respond to Oftel's proposal.