BT to cut cost of surfing the Net by up to 20%

The cost of connecting up to the Internet is set to fall sharply following new pricing initiatives unveiled yesterday by British Telecom and the industry regulator, Oftel.

The cost of connecting up to the Internet is set to fall sharply following new pricing initiatives unveiled yesterday by British Telecom and the industry regulator, Oftel.

The new price tariffs could cut the cost of access to the web by 20 per cent. They follow an explosive growth in BT's Internet revenues and increased pressure on the company from Oftel to reduce its charges.

BT announced that from next spring, consumers and small businesses will be able to gain unlimited Internet access by paying a single fixed charge each month.

Oftel meanwhile said that Internet access would be possible for less than the price of a local call as early as next month under a new 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 the weekends or evenings for £6.99 a month to a tariff offering free access at anytime for £34.99 a month. The average household, dialling up the Internet for 15 hours a month would save £2 in call charges while heavy users would save a good deal more.

However, there is a sting in the tail because free Internet Service Providers may have to start levying a subscription charge on users to connect up under the new BT tariffs.

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. But 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 now account for about 25 per cent of all its local call revenues.

Angus Porter, BT's director of marketing, said that 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 Internet rarely. Mr Porter also said they 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.

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

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