AOL dumps unmetered access plans, hits out at BT

Service provider rolled out reduced rates Monday, but says no-charge Internet calls will have to wait for regulatory reforms.

AOL admitted Wednesday it cannot offer unmetered access to subscribers without regulatory help.

The admission, an embarrassment for the UK's former Net champion, is also a major setback in AOL's plans for fighting back against free service providers such as Freeserve. AOL said the responsibility lies with BT, which the service provider accused of holding back Internet growth in the UK with its current pricing structures.

The campaign for unmetered access in the UK has been steadily growing, with AOL one of its loudest advocates. In May the ISP began trialling unmetered access in London, but now admits it cannot roll the system out without fundamental changes to Internet charge structures because it "is not economically feasible".

An AOL spokeswoman said AOL "cannot have flat-rate access" within current pricing structures. Echoing earlier accusations from myriad sources the spokeswoman also attacked telecoms watchdog Oftel of "not doing enough" to bring access costs down.

BT hit back claiming BT's Internet costs are good value arguing that offering different rates for Internet users would not be fair. "We have to strike a balance between Internet users and others," he said.

But AOL is not alone in its criticism of BT and its watchdog: IDC analyst Scott Moore said BT's arguments are tenuous at best. "BT's charges are above average compared to other countries," he said. "The real reason BT will not offer cheaper Net access is obvious. It could offer different rates for Internet access but is reluctant to do so because revenues from this are pretty significant."

While ISPs wait for BT to change its mind, they are themselves carrying the burden of access costs in order to offer users a variety of tariffs. AOL is offering subscribers a flat-rate fee of one pence per minute for peak and off-peak access. Under its scheme Freeserve will offer users the chance to earn up to ten hours' free Internet time from voice calls.

AOL did not miss the opportunity to promote its own system with a barely disguised criticism of its competitor. "With the power of AOL, we've been able to negotiate this and we don't believe the subscription-free ISPs are addressing the issue. Looking to provide free weekend calls misses the point which is to allow people to access the Net whenever they want," the spokeswoman said.

Is AOL right? Is BT holding back Net growth in the UK? Tell the Mailroom

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