Half the UK to be surfing in a year, predicts AltaVista

Search engine turned ISP, AltaVista, predicts that half the UK's population will be online in the next year following Oftel's ruling to force BT to offer flat rate services to other operators.

The prediction comes as the firm announced its unmetered service will go live from 30 June. AltaVista announced its intention to offer Internet access for a one-off payment back in March, causing a storm of publicity and leading to many copy-cat services. The long-anticipated service will charge users a one-off fee of £59 with an as yet undecided annual renewal charge.

Managing director of AltaVista, Andy Mitchell, claims the decision to go live with the service was spurred by Oftel's ruling on BT. He thinks it will fundamentally change Internet usage in the UK. "This is a far bigger announcement than Alta Vista's," he says. "It marks a fundamental shift in the way the consumer uses the Internet. It moves to the US model offering true flat rate access. Within six to 12 months 50 percent of the population will be online."

According to research firm Durlacher, 35 percent of the UK's population is currently online. Nick Gibson, analyst with Durlacher agrees with Mitchell, "Yes, I can definitely see that, it will repackage and reprice the Internet for the mass market."

Mitchell goes on to predict a price war as Oftel's ruling spawns "hundreds" of free services. "It is going to be a blood bath," he says. "There are going to be a lot of free services and the big issue will become quality of service."

The £59 price tag for AltaVista's service is higher than anticipated and Mitchell admits it is unlikely to fall. "Truth be told, access is not our core business and AltaVista is never going to compete on price. Cheap and free is not AltaVista."

Instead Mitchell is confident users will get a high quality service and to avoid the mistakes of Telewest, ntl and other operators which found themselves unable to cope with demand. AltaVista will limit its service initially to 90,000 users.

Paul Shalet, marketing director of LibertySurf -- which suspended sales of its unmetered service last week following huge demand -- wishes AltaVista well but questions if it can succeed where others have failed. "The whole industry is waiting to see what infrastructure they will put in place, how many users they get and what kind of service those users get," he says. "The question is -- can the reality live up to the hype."

What do you think? Tell the Mailroom. And read what others have said.