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EDITIONS
Wednesday, 24 January, 2001, 03:05 GMT
The cost of getting connected
Internet companies BBC
Unmetered access deals have taken time to emerge
As Freeserve prepares to relaunch its unmetered internet access service in the UK, the BBC's John Moylan examines why such services have taken so long to take hold.

When Altavista announced plans last March to launch US-style unmetered internet access in the UK, it seemed as if we had made a huge breakthrough in getting the country online.


This is an injustice to the public with a subsequent stifling effect on innovation and creativity in British industry

Andy Mitchell of Webtop.com
Central to the government's plans for making the UK the e-commerce capital of Europe, unmetered access would get people online without the worry of a huge phone bill.

Making all this possible was a deal called Friaco - struck between BT and Oftel - establishing how the privatised telecom giant would charge for internet calls.

Most ISPs used BT's phone lines to carry internet traffic to BT's regional exchanges.

Once in the exchanges, ISPs could transfer the data to other networks run by BT's competitors.

Heavy users

But while BT levied an unmetered charge on traffic from the home to the local exchange, it charged by the minute to transfer that data to the regional exchange.

This meant that while ISPs offered a one-off, monthly charge, heavy online users could leave the ISP facing a huge metered bill.

Initially, few raised this concern. Dozens of ISPs followed Altavista's lead - often with financial results. Online congestion followed, promised services failed to emerge.

ISPs were unprepared for the numbers that signed up. Some faced criticism for advertising services they were unable to provide.

Few failed as spectacularly as Altavista. It claimed to have launched its unmetered service in June. But in August, Andy Mitchell, Altavista's UK's managing director, admitted the service had never existed.

Critics accused Mr Mitchell of prelaunching a service without having struck the deal to deliver it. Altavista has since pulled out of the ISP market.

ISP casualties

The UK's largest ISP had troubles too. In November, Freeserve ejected customers that it claimed had been abusing its unmetered service. It even turned away new business.

Analysts said its 10-a-month unmetered service was costing the company dear. Freeserve claimed it was the impact on its network that was at issue.

An internet user BBC
Free ISPs have swept through Europe
By the autumn, the casualties, including LineOne and WorldOnline, were mounting. Amongst those that bucked the trend was AOL.

It offered unmetered access for 15 a month. Business at AOL is thought to have been brisk.

But the bargaining power of AOL had allowed it to cut deals with other telecom firms bypassing BT's per minute charge. Small ISPs would not have that luxury.

Oftel's director general David Edmonds was forced to answer for the delays. A select committee of MPs echoed concerns raised by BT's competitors that Oftel was being soft on BT.

Deal hype

The regulator came out fighting. On 13 November, it announced plans for a new Friaco service, known as Friaco2.

It would require BT to carry internet traffic from the home to a regional exchange for a single, unmetered fee.

With 1 February deadline for the roll out of the new agreement, commentators said a new era in unmetered deals was about to begin. But do not believe the hype. Oftel is expected to release its final directive on Friaco2 next week. Implementation could take months.

Spring is being suggested; the summer looks more likely.

Meanwhile, the UK telecom sector has moved on, allowing some to pre-empt Friaco2. On Wednesday, Freeserve launches a 24/7 unmetered product for 12.99. It uses the original Friaco product.

As the months have passed, Freeserve's telecom partner has built out into BT's local exchanges, allowing it to bypass BT's network. A similar product is said to be imminent from BT Internet, using BT Ignite's IP network which also extends to the local exchange.

Blair vision

But for those without the bargaining power of the majors, sustainable unmetered access may still be some way off.

And for Andy Mitchell, from the Cambridge-based Webtop.com, that is a tragedy.

He said: "Friaco2 may eventually bring about the Blair vision of 'cheap access for all'.

"This could possibly happen early in summer 2001, a year after Oftel's original ineffective directive to BT which caused the confusion in the market. This is an injustice to the public with a subsequent stifling effect on innovation and creativity in British industry."

Recent figures from the internet monitoring company NetValue suggest 11.5 million people are surfing from home - a growth of three million in 2000.

Mr Mitchell claims that if sustainable unmetered products had been available many more Britons would be online. That could have made all the difference in recent months as British e-tailers went to the wall.

And while UK internet users ponder why unmetered access deals took so long to emerge, they also now face a choice. To stay with their existing provider, to sign up to the new deals or to wait for price competition to take hold in the months ahead?

See also:

13 Nov 00 | Business
08 Nov 00 | Business
06 Nov 00 | Business
22 Aug 00 | Business
08 Nov 00 | Business
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