Free Net providers threatened by BT tariff initiative

THE FUTURE of Britain's "free" Internet service providers was thrown into turmoil yesterday after British Telecom announced a series of monthly flat rate charges for unlimited access to the World Wide Web.

Some analysts said ISPs such as Freeserve, which pioneered the free Internet access model, might have to start charging as a result of BT's initiative.

At present, most ISPs in Britain do not charge for their service but help defray their costs by receiving a portion of the timed call charge. BT announced that from next spring consumers and small businesses will be able to gain unlimited Net access by paying a single fixed charge each month.

Oftel, the industry regulator, meanwhile said Net access would be possible for less than the price of a local call as early as next month under a charging arrangement whereby the cost of a telephone call is split in two.

The new package from BT, known as BT SurfTime, offers a range of fixed monthly fees in place of the current tariffs where users pay local call charges to connect up. The options vary from unlimited free access at weekends or evenings for pounds 6.99 a month, to a tariff offering free access at any time for pounds 34.99 a month. The average household, dialling up the Net 15 hours a month, would save pounds 2 in call charges while heavy users would save a good deal more.

But the sting in the tail is the possibility that free ISPs may have to levy a subscription charge. At present, free ISPs such as Freeserve, which operates in partnership with Energis, make their money through advertising and taking a share of the local call revenues. Under the new BT arrangements, they would not receive any call income.

David Edmonds, the director general of Oftel, welcomed BT's announcement, saying that customers would be able to connect up at more competitive rates. Oftel has been investigating BT's charges since September following complaints that they were excessive and discriminatory. BT's Internet and data revenues are doubling each year and account for about 25 per cent of its local call revenues.

Angus Porter, BT's director of marketing, said the new Internet tariff structure would encourage more people to get online by capping their call charges. BT will continue to offer a pay-as-you-go option to those who used the Net rarely. Mr Porter also said the new tariffs did not discriminate against those customers who used the telephone less often and then only to make voice calls. They would continue to be charged a lower fixed rental while paying for the calls they made.

Some analysts predict that the same charging model may soon be introduced for voice telephony - unlimited use of the telephone for a flat monthly fee.

Oftel's "two-part charging" proposals would split the cost of a call into two components - an initial charge for setting up the call and another for maintaining the connection. Mr Edmonds said this would enable ISPs to choose what the pence-per-call rate should be for customers.

To facilitate the changeover, Oftel is introducing an 0844 code for Internet access, charged at local rates, and an 0808 code for free, unmetered Net access.

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