Price rises for unmetered Internet access

Two of the UK's largest Internet Service Providers announced on Tuesday that they are increasing the cost of their unmetered Internet access packages.

Both AOL UK and BTopenworld are planning to raise their prices by £1 per month, to £15.99 per month. The price rises, which apply to AOL's Flat Rate tariff and BTopenworld's Anytime package, are due to come into effect at the beginning of May.

Both ISPs defended the price rises by claiming that the money would be spent on maintaining and improving their services.

A BTopenworld spokesman told ZDNet UK that the unmetered Internet access market was "firming up", and that £15.99 per month was a more realistic price. "We want to ensure that our long term commitments remain in place, by investing in customer services and offering new products and services in the future," he explained.

In an email to its Flat Rate customers, AOL claimed its price rise reflects "investments in improved service and network capacity". The ISP said it had spent heavily on expanding its network capacity, invested in new technologies such as its AOL 7.0 software and expanded its free customer support.

Rival ISP Freeserve also recently raised the cost of its unmetered Internet package by £1 per month. At the time, Freeserve chief executive John Pluthero suggested that many of the larger Internet service providers may be forced to raise their prices this year.

Some industry observers have suggested in the past that ISPs will increase the cost of their unmetered Internet packages in an attempt to move customers onto broadband, especially now that the likes of Freeserve and BTopenworld are offering broadband services for £29.99 per month.

The BTopenworld spokesman said it was too early to say how the broadband price cuts -- which come into effect this week -- had affected the unmetered access market. "We expect to see the top end of subscribers, who already use the Internet a lot, moving onto broadband because they will benefit from a faster, always-on, connection," the BTopenworld spokesman said.

The news comes only two months after Oftel proposed changes to the way that ISPs buy their wholesale unmetered Internet capacity from BT. These changes are intended to make it cheaper for ISPs to offer unmetered services, but Oftel hasn't formally implemented them yet. It is currently considering the view of the telecoms industry, following a consultation period that finished at the end of February.

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