Chancellor calls for cheaper Net access

Metered phone calls are seen as a competitive disadvantage for Britain

Internet access costs must to be halved in order to kick-start the e-commerce revolution, chancellor Gordon Brown claimed on Wednesday in a speech to financiers.

In the speech, Brown expressed concern that the relatively high cost of Internet access was putting UK businesses at a competitive disadvantage. Internet access costs in the US are half those in the UK.

A recent survey conducted by research firm Durlacher found that Net use would triple if unmetered access was introduced in the UK. BT and telecoms watchdog Oftel has come under increasing pressure from the government to reduce Internet access costs. On Tuesday it emerged that BT's unmetered offering, Surftime, is in disarray. The company's Internet manager, Simon Brooks, claims that the telco is considering reducing the £34.99 price tag for unlimited Internet use.

The chancellor said he has had talks with Oftel director general David Edmonds to speed up unbundling of the local loop -- in which BT will be forced to open its network to other operators. Oftel has currently set a July 2001 date for this.

An Oftel spokesman confirmed that the timetable may be changed. "That has always been on the cards," he claims. "If it can be brought forward, it will be. We'd like that to be the case."

Tim Johnson, analyst with research firm Ovum, is not convinced that speeding up unbundling will help. "An earlier unbundling date is largely symbolic," he says. "The fatal weakness with unbundling is that is forces competitive pressure on BT, but from carriers that are a lot weaker than it is."

Johnson thinks healthy competition will begin as other telcos and ISPs offer DSL services from the spring. "They can resell BT's DSL, build up a customer base and lay plans in good time for how unbundling will work. That is a cheaper and more attractive option than waiting for unbundling," he said.

Chairman of software supplier Equiinet has long been a critic of Oftel's slow reaction to freeing up BT's network. He welcomes the government intervention. "This will enable Britain to take a quantum leap in Internet facilities. Business here needs more bandwidth and more services options in order to keep in pace with the US. Overcoming BT's grip on the local loop was the major barrier to this. We'll now see new carriers, and new services from existing carriers," he said.

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