Oftel launched an investigation after rival ISP Freeserve alleged in October that its rival was acting anti-competitively in the way it was promoting its broadband service to its existing customers.
Oftel initially rejected Freeserve's complaint but was ordered to re-open the inquiry in April by the Competition Appeals Tribunal after Freeserve challenged the original decision.
At the centre of the complaint was BT's use of its "blue bill", which it uses to invoice its 18.5m customers, and its 150 customer service support line as a marketing channel.
In a statement, the regulator said that its investigation "showed that the number of consumers taking BT Broadband as a result of '150' marketing was sufficiently low as not to have a material adverse effect on competition."
It defended BT's use of the bill as a marketing channel because "competitors can more specifically target likely broadband users by using direct marketing at a similar or lower cost".
Freeserve also objected to BT's joint telephony and internet billing system, but the regulator ruled that this was not a threat to rivals because the benefits of joint billings "can be easily replicated using credit card payments or direct debit".
Oftel director general of telecommunications David Edmunds said: "Oftel looked at each of the issues raised by Freeserve, and considered them in detail. In this instance we have concluded that BT's marketing activity using the blue bill and 150 customer service line does not prevent Freeserve competing on a fair basis."
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