Internet price war heats up

NTL: Promising completely free internet access

A full-scale price war has broken out in the UK over access to the internet as Prime Minister Tony Blair urged more Britons to get online.

Cable television company NTL has announced that it will provide internet access with no start-up or telephone costs whatsoever from April.

It is promising to beat US internet giant Altavista's offer on Monday to supply unlimited internet access free of telephone charges for £10 a year.

The announcement coincides with Mr Blair's pledge that every British citizen should have unhampered access to the web within five years.

The NTL move puts pressure on other operators such as BT, AOL and Freeserve to abandon per-minute call charges, which have been blamed for holding back internet use.

'Internet for the masses'

Barclay Knapp, NTL's chief executive, said the company planned to offer unmetered subscription-free internet access from 17 April.

It will apply to anyone with a personal computer and a modem, even if they live outside the reach of the company's cable networks.

Users will have to sign up with NTL for their voice telephone calls and spend at least £10 a month on calls.

Customers already linked to NTL cable will get access as part of their £9.25 a month TV and phone package.

Mr Blair, in a speech in London to business and union leaders on Tuesday, is set to describe the NTL service as a "significant new offer" which will help bring the medium to the masses.

The Altavista plan

The NTL announcement comes one day after Altavista unveiled its plan to offer unmetered access to the internet.

Typically in the UK, ISPs make money by taking a proportion of the call costs.

Users do not have to pay any monthly subscription, but do have to pay local call rates - meaning the bill grows as every extra minute is spent online.

One report suggests it costs £237 to surf the net for five hours a day, 20 days a month in Britain - compared to just £26 in America.

Altavista aims to pay for its scheme through advertising and e-commerce.

Some of its rivals already say it stands to make big losses when it launches in three months' time.

But demand for unmetered access is definitely there.

The UK's other main cable firm, Telewest, recently launched its own unmetered internet service for £10 a month, but it has had problems coping with the rush of people wanting to sign up to its deal.

There have also been some smaller ISPs which offer varying combinations or quality of free access.