The tariff for ISPs, to become available from mid-December, will see BT invest more than pounds 100m over two years on technology to optimise its network for Internet use. "BT is continuing to develop a range of Internet access options, which cater for both heavy and infrequent users, ranging from individuals to major corporations," said Bill Cockburn, group managing director of BT UK.
The new service provider tariff will allow ISPs access to Internet protocol ports for pounds 140 plus VAT per month. The price will include an average of eight hours usage per day with further usage priced at less than a penny per minute. BT calculates that each portal will host 14 Internet service subscribers.
BT is to present the scheme formally to Oftel, the telecoms regulator, later this week. The telecoms watchdog is analysing how BT, other network operators and ISPs share revenue generated from online calling charges. Those deliberations are expected to conclude by the end of the month.
Analysts said the system, which enables so-called "free'" ISPs to collect part of the call revenue generated by online usage, needs revamping. Under the current model, BT or the cable company that owns the local loop network receives 30 per cent to 50 per cent of the call revenue. The network providing the Internet port receives up to 50 per cent of the revenue, with ISPs such as Freeserve receiving the remainder.
Oftel, in conjunction with BT and other telecoms network operators, is looking at alternatives to differentiate between data provision, such as Internet access, and conventional voice telephony service. Analysts said BT's proposals won't result in big price cuts for residential Internet access, though small business customers could benefit.
"It sounds like it's a negotiating position," said Andrew Moffat, an ABN Amro analyst. "This is BT trying to put a stake in the ground and say this is where [the price] should be, but it'll probably be forced to cut it further."
Outlook, page 21