The UK's telephone networks are not ready to cope with the surge of traffic that widespread availability of unmetered internet access would generate, according to the head of the UK's largest ISP.
Speaking at investment bank Robertson Stephens' International Investors Growth Conference in London this week, Freeserve chief executive John Pluthero said there is insufficient capacity in BT and cable operators' local exchanges, interconnect points and back-end systems to cope with a major shift to unmetered access.
"There's no way a significant proportion of the UK internet population could go on to unmetered tomorrow," said Pluthero.
Unmetered access is already widely available, although many services restrict subscriber numbers and some have withdrawn services because they were not financially viable.
The market is set to change from next month when BT, under instruction from telecoms regulator Oftel, has to sell wholesale unmetered accounts to competitors - a scheme called Friaco (flat rate internet access call origination). Most ISPs plan to offer unmetered services for fixed fees using Friaco.
Freeserve estimates that Friaco will reduce its monthly cost per unmetered subscriber from £30 to £8. But it will also place additional pressure on phone networks as people no longer feel the need to disconnect when they are not using their computers.
Pluthero said Friaco presents a "great opportunity to increase time spent online and enhance revenue". He said he hopes that by spending more time on the internet, customers would spend more money shopping online and view more pages, thereby increasing Freeserve's advertising revenue.
But with Friaco due to start next month, the phone networks need upgrading. "This is going to take many months to scale up," said Pluthero.
He told delegates of Freeserve's experience when it launched the UK's first subscription free internet service in September 1998. "At one time, at a local exchange in Bristol, you had a one in six chance of getting a dial tone," he said.
Coupling the network shortfalls with the fact that Friaco pricing for ISPs is expected to fall sharply after its first review in December, customers could be waiting until next year before a real choice of reliable services becomes available.
Bill Dixon, telecoms analyst at Robertson Stephens, said BT is still failing to provide what customers want, such as direct digital access and installation when they want.
"It's bad for UK Ltd if you don't have a good telecoms infrastructure," he said.
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