BT's long-awaited announcement of the details of its unmetered next-generation access to the Internet has left consumers wondering whether they will be able to afford the new service.

Ian Morfett, BT MD Products & Solutions on ADSL

ADSL (Asymmetric Digital Subscriber Line) technology will allow data to flow down the old copper wires of the phone system at speeds of up to 2Mb/sec - 40 times faster than the current 56K modems installed in most PCs.

Equally important for the consumer and online businesses, ADSL is always-on technology - providing a permanent connection to the Net for a monthly fee - similar to the flat-rate model in the US that enables free local calls and has facilitated a boom in electronic commerce.

Consumers to pay £40 a month plus

BT's key announcement for consumers on Thursday was on pricing. It revealed it would be selling ADSL at wholesale prices to Internet Service Providers (ISPs) of £40 to £150 a month, depending on data speeds ranging from 512Kb/sec to 2Mb/sec downstream.

ISPs' retail prices to the consumer would probably be higher, although BT has suggested ISPs may subsidise the cost to stimulate demand for services. A BT engineer would install a wallbox for the service with an ethernet network connection into PCs.

"We welcome the aggressive rollout by BT, but pricing was always the key issue for us and £30 a month was the magic number," said Erol Ziya of the Campaign for Unmetered Telecommunications (CUT) on Thursday.

"£40 plus is a little bit high, at £30 we thought they would get the vast majority of Net users, but over that it's just affordable for the specialist users."

West London trial proves case

Mr Ziya has been taking part in BT's ADSL trials in West London and has been paying BT Internet £30 a month for his connection. The experiment was due to end on Saturday, but BT now says it will continue and customers will be moved over when BT takes orders for the new service in October.

"It is a far superior technology. the speed is nice but being always connected is the major factor. It's like a communications centre for me, I'm receiving messages all the time," says Erol Ziya.

"ADSL is exactly what we need and it can only strengthen the case for unmetered access generally. We're looking forward to more opening up of the local loop."

Another triallist, Rupert Goodwins of IT Week, concurs with Erol Ziya on the likely pricing: "It's a consumer service that's priced too high, it will be ideal for small businesses," he said.

Oftel to allow competition

The telecoms regulator Oftel wants to let other companies install ADSL equipment in BT local exchanges to open up to competition the last mile of copper wire to businesses and homes (the phrase is "unbundling the local loop").

BT appears to be moving ahead with its plans now to take advantage of two-year headstart it will have before this happens. It also wants to fight off a challenge from high-speed modems that will be offered by cable companies.

But there are still signs that it wants to protect its lucrative ISDN and leased line businesses. Today's announcement said corporate customers would be able to order ADSL for its teleworkers and branch offices. But it did not mention replacing ISDN and leased lines with ADSL for company switchboards and other technology.

BT's modest investment

BT had announced earlier this month it was rolling out ADSL over the next nine months with equipment in 400 exchanges.

Today it revealed its investment would be a modest £250m out of a £5bn investment in new generation services announced earlier this year. BT says the £250m just covers the DSL equipment and necessary core network upgrading is coming out of the rest of the £5bn.

The rollout will cover 6m businesses and homes, 25% of BT's customers, with equipment installed in exchanges in London, Cardiff, Belfast, Coventry, Birmingham, Manchester, Leeds, Newcastle, Edinburgh and Glasgow by March 2000.

BT talks content

BT's managing director Bill Cockburn said that if the initial rollout was a commercial success it could be extended to cover up to 75% of all BT customers over a two to three year time frame.

BT has been in talks with providers such as Microsoft, America Online and VirginNet who have all expressed an interest in providing services via the BT network. BT will also offer its own service to customers, BT Interactive, said Mr Cockburn.

It did not have plans currently to offer video-on-demand services but he said other service providers could use the ADSL technology to do so.