Ofcom is reportedly threatening to refer BT to the Competition Commission as the two sides continue to thrash out an agreement over access to the telco's telephone network.
BT has until the end of June to introduce greater competition and transparency at the giant telco. If Ofcom remains unconvinced that BT is prepared to offer "transparent and equal access" to its local network, then it will kick off an investigation that could lead to the enforced separation of the former state monopoly.
The Guardian reports that high level talks between BT and Ofcom have so far failed to reach an agreement. It reports that negotiations are set to go the wire and failure to reach an agreement would trigger a full scale Enterprise Act Investigation.
Of course, the threat of breaking up BT has always been part of the Telecoms Review. In November, Ofcom rejected calls to break up BT but warned that it would take action against the former monopoly unless it made necessary changes to open up its network to competition.
Although Ofcom's preferred option is "Real Equality of Access" it has always said it is prepared to seek the break-up of BT if necessary.
A spokesman for the telco dismissed the report as speculation and denied that BT and Ofcom were at loggerheads.
As the deadline for Ofcom's telecom review nears, OneTel's boss Ian El-Mokadem chipped in: "It is perhaps surprising that BT is not being forced to separate its monopoly network from its retail operations, as was the chosen remedy in energy markets.
"Ofcom have never had a better opportunity and we have every confidence they will make the right decisions that will leave everybody better off," he said. ®