BT Openworld offers unmetered deal

BT's offering Friaco is seen by detractors as hugely ironic

BTopenworld launched its own unmetered Internet service on Friday, aimed at the host of small ISPs it serves.

Half of BT's two million Internet customers are made up from 'virtual' ISPs, such as Natwest, Handbag.com, Tesco and Barclays which, due to the small number of customers they have, outsource the running of the service to BT's Internet arm BTopenworld.

The unmetered service on offer will be available from the spring and will be based on Friaco (Flat Rate Internet Access Call Origination) which was introduced last month following months of pressure from Oftel, government and industry. Friaco allows both ISPs and customers to pay for telephone lines on a flat-rate monthly fee basis rather than paying per minute.

The network is controlled by another division -- BT Ignite -- which sells on capacity to BTopenworld. Senior vice president Catherine Hawley admitted that BTopenworld gets "the maximum discount" because of its huge customer base. But she denied that ISPs are paying BT twice. "ISPs won't pay me for access. I will bill end users and I will take all the risks and then share the profit with the ISP," she said.

AOL has long been in the vanguard of the campaign to persuade BT to roll out unmetered services. An AOL spokesman described it as "a supreme irony" that BT itself is now offering a Friaco-based product. "Let us not forget that this is the product BT said customers would get over their dead body," he said.

He said he was surprised that BTopenworld has been allowed to roll out such a service, and questioned how fairly the money is divided. "I thought the whole point was that wholesale services were only available through Ignite. What BT pays with one hand it gathers with the other. It all ends up in the same pot."

Companies have long argued that despite being divided, BT is gaining unfair advantage over its competitors because all the seperate units are part of the same company. "For us to resell services would incur risks in cash terms that BT just doesn't face," said the AOL spokesman.

BTopenworld is at a centre of an ongoing row about the distribution of ADSL lines for broadband customers. Both Freeserve and AOL claim BT Ignite is giving four times as many lines to BTopenworld than to other ISPs. Legal action is threatened and Oftel is currently investigating the claims. A report from the Institute of Economic Affairs published last month called on the government to urgently look at BT's breakup and ensure its telephone network was accessible for all.

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