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BT has made "good progress" on allowing more competition in the broadband market, says Ofcom, but there is still room for improvement.

In 2005, the regulator and BT agreed a set of undertakings designed to increase competitiveness in the market amid concerns from other suppliers that BT had a "stranglehold" on the industry.

Part of the agreement was the creation of Openreach, which is a separate company that provides "transparent and equal access" to BT's infrastructure for third-party ISPs.

However, ISPs frequently complain that Openreach fails to provide an adequate service, especially when

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it comes to performing repairs on broadband lines.

As a result, Ofcom is now proposing that Openreach will face fines if it fails to meet agreed performance targets. Those fines will be paid to the ISPs, including BT's own retail division.

Ofcom proposes that the compensation will be paid proactively, meaning ISPs don't have to fill out a claim form. It's also suggesting that there is "no upper limit to the amount which must be paid" if problems persist, which means BT won't be able to pay off the fine and bury the problem.

Of particular interest to customers with speed problems is Ofcom's suggestion that Openreach will have to "pay out every time service or quality falls below the contractual threshold instead of paying out against performance stated as an average over time."

BT, however, remains remarkably unconcerned about the new proposals. "This is a document which is recognition of the progress we've made so far," says a BT spokesperson, who goes on to explain that the company does not anticipate that proactively paying fines will increase the amount paid out. "Everything outlined in the document is very similar to what we're already doing."

The regulator is currently holding a consultation on the proposals, and the deadline for responses is 25 January 2008.