The US company Tellabs is blaming NTL Ireland for incorrectly installing its equipment in 2,000 homes and causing a potential fire hazard for customers.

The company, which manufacturers the box that provides a direct telephone service for customers, confirmed yesterday it was in dispute with NTL Ireland over the cause of the fire hazard.

The dispute between the company's centres on the cause of the "safety risk", which forced NTL Ireland to tell its direct telephone customers to unplug their equipment immediately last weekend due to overheating.

The equipment recall sparked outrage from consumers who lost their telephone service at short notice and will cost NTL at least €50,000 in reconnection fees for consumers, postage costs and media advertisements.

Tellabs, which late on Monday withdrew a statement to The Irish Times outlining its concerns over the way NTL installed its direct phone equipment, yesterday said it was not at fault.

Mr George Stenitzer, vice president of communications for Tellabs, said an interim report by its consultant had found that the installation of the telephone box was the cause of the fault. He said Tellabs had found no technical fault with the equipment itself.

The Tellabs statement is likely to have serious implications as both firms work out who is liable to cover the cost of the recall. It is also crucial for the US firm, which has 600,000 similar boxes installed in a range of countries including the US and Britain.

Mr Stenitzer said the firm was continuing to keep the particular piece of equipment - its cablespan box unit - under review by its safety consultants. But he said that an interim report received from its consultants had found that the safety issue was caused during installation of the equipment.

"It is a very technical issue but it revolves around whether the equipment was grounded properly during installation," said Mr Stenitzer, who would not speculate on any potential future litigation.

NTL Ireland, which has been ordered by the communications regulator to cover the cost of reconnecting its customers to alternative operators, has so far refused to comment publicly on the main cause of the safety risk.

"NTL Ireland can confirm that an investigation is ongoing in conjunction with Tellabs. We cannot comment any further until this process is complete," said an NTL spokeswoman last night.