BT ruling signals cheaper internet access

BT must provide rivals with wholesale flat-rate internet access, Oftel said today in a ruling that could lead to cheaper services for consumers.

The UK telecoms watchdog said BT will need to offer its rivals the new product, known as St Friaco (Single Tandem Flat Rate Internet Access Origination), from 26 February.

Rival national network operators, for example Energis, could sell St Friaco services to ISPs so they could offer unmetered services priced separately from BT-based services.

BT would get a flat fee from the rival for use of its local networks. The rival would transport the internet calls around the country by connecting them between BT's regional exchanges.

David Edmonds, director general of Oftel, said: "Today's decision should ensure that UK consumers continue to have some of the widest choice and lowest prices for internet access in Europe. It should encourage more UK consumers to take advantage of the internet without the worry of running up high telephone bills."

BT has previously said that a completely unmetered wholesale service would be impossible because the likely large increase in internet traffic and call duration expected to result from flat-rate products would place its network under severe strain.

Oftel said it has included measures to ensure that BT's network is able to handle the anticipated increased amounts of internet traffic, and that capacity is used as efficiently as possible.

The regulator, which said BT has to ensure demand for St Friaco "without limitation" from February 2003, said it will work with the industry to establish a new interconnection regime for internet traffic carried over dedicated IP networks.

BT said it was pleased that Oftel had recognised the potential strain unmetered traffic poses for its network. It said the direction gives room for the expansion of unmetered internet services.

A spokesman for the telco said: "We're pleased that the regulator has acknowledged the potential dangers and possible impact of unconstrained unmetered traffic on network quality. Implementation will be challenging, but we will work with the industry to move this forward."

A spokesman for ISP AOL, which has campaigned for the introduction of a wholesale unmetered product, said it welcomed Oftel's actions but warned the regulator that it will need to move much quicker in future.

"AOL invented Friaco in Spring 1999. It has taken almost two years of hard struggle to get this product. We applaud Oftel for its actions, but it will need to be much faster when it comes to solving the problems with broadband," he said.