Oftel said BT must provide other operators with a wholesale flat-rate internet access product from next year, which it said will ensure millions of people can access the internet without the worry of huge bills.

The UK telecoms watchdog said it will force BT to offer the product, which will carry internet traffic on an unmetered basis from the consumer's home to the network of a competing operator, from 1 February 2001.

"Oftel's proposals will give a major boost to the availability of unmetered internet access for consumers," said David Edmonds, Oftel's director general of telecommunications.

"These measures should allow millions of people to have unlimited access to the internet without worrying about running up high call charges."

The new product is an enhancement of the current wholesale product, which is known as Friaco (flat-rate internet access call origination). This model is based on a flat-rate connection between the end user and the local exchange, with an additional metered tariff from the local exchange over BT's trunk network to the operators network.

The new model will ensure operators do not have to pay the additional costs to convey the calls on to their own network.

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 made its decision after a complaint from US telecoms operator WorldCom and ISP AOL. It commissioned a panel of technical experts to consider the impact of the growth in internet traffic on BT's network.

Oftel has proposed a number of measures, which it said will enable BT's network to cope.

According to Edmonds, the volume of internet traffic on BT's network is doubling every 10 months and unmetered internet access is likely to increase this growth rate even faster.

"Oftel has put forward measures to enable growth in internet traffic to continue by taking internet traffic off BT's network and encouraging BT to take steps to increase capacity on its network," said Edmonds.

BT said it is looking at the proposals and is unable to comment on Oftel's announcement. "We are looking at the details in Oftel's document and will make a comment in due course," said a spokesman.

Matt Peacock, a spokesman for AOL UK, welcomed Oftel's announcement and said it is the best news the internet industry has received in many months. "This is really good news and we applaud Oftel for getting this right. This means that more ISPs can offer customers true flat-rate unmetered internet access," he said.

However, ISP Claranet is remaining cautious over Oftel's announcement, and said it will wait and see before getting too excited.

"We won't be holding our breath for the new product to be available on 1 February 2001 and will be continuing to look at other ways to offer internet access," said Nick Wells, marketing manager for Claranet.

"We have been waiting for this announcement since May and nothing has come available."

Oftel has invited comments by 8 December 2000 with further feedback on initial findings to be received by 22 December 2000.