The UK could face legal action from the European Union (EU) unless there is greater competition for high-speed Net access.

A draft European Commission (EC) report into the telco sector seen by the FT and due to be published within the week warns that some countries have failed to open up their markets to competition for broadband services.

The newspaper names Germany, the UK and Spain as possible contenders for legal action.

It's understood the EU's tough line could be due to the failure of local loop unbundling (LLU) to take off in some countries.

Last month the UK's Government-appointed Broadband Stakeholder Group (BSG) found that LLU has "not had a significant impact on competition" in the UK.

It also found that the number of companies interested in offering services via LLU is now "very limited". At the end of August 2002 just 1,100 lines had been unbundled.

Last year, the EC threatened legal action against some member states after describing LLU in Europe as "very disappointing".

In its 7th Report on the Implementation of the Telecommunications Regulatory Package the EC claimed that the progress of LLU was "overall not satisfactory".

It found that not enough was being done to open up local networks to competition and called on national regulators to get tough with incumbent telcos found dragging their heels. ®

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