BT is facing legal action from rivals AOL and Freeserve, who claim the telecom giant is connecting more of its own DSL (digital subscriber line) customers than its competitors.

The fracas erupted over comments made by BT Openworld boss, Andy Green, during a Reuters interview. He said the company was connecting 2,000 DSL customers a week. This compares to AOL and Freeserve's allocation of 100 installations per week.

Labelled a 'national disgrace' by AOL and Freeserve, BT is being investigated by UK telecom-industry regulator Oftel, who will, 'act quickly if BT is found to be breaking competition laws'.

Last year, Oftel submitted regulations for unbundling the local loop to speed-up the adoption and roll-out of broadband services.

Sasha Chisholm, AOL's head of corporate PR strategy, said: "Things are changing all the time. There are meetings in progress, we will be making an announcement. "

This row is bad news for BT, who – despite reporting a pre-tax profit of £760M for the quarter ending December 31, 2000 – has a net debt of £19.1 million. This is due to the acquisition of German mobile-comms provider, Viag Interkom AG and Irish telecoms company, Esat Telecom Group.