BT intends to launch a consumer package in September, following a trial in Northern Ireland, that will allow customers to access the Internet using a pay-as-you-go service costing "as little as a penny a minute" over its standard local call rate. Customers will enjoy the unique facility of having their Internet charges merged with their telephone bill to make payment simpler - something other ISPs (Internet service providers) are not able to do.
The scheme - which has not been given a name - will, says BT, be cheaper than most other offerings which usually cost about £10 a month - the equivalent of 1,000 minutes on BT's service.
"This is a clear and blatant breach of BT's monopoly position" says Simon Rockman editor of What Mobile. "What's fascinating about how BT proposes to incorporate the Internet billing into its own telephone charges is that Cellnet, which is 60 percent owned by BT, tried to do the same thing about three years ago and was blocked by Oftel."
In various interviews, industry figures express their concern at how BT plans to bill people. "If BT is able to offer this facility and no other ISP is, it must be viewed as an abuse of its position" says Jonathan Robinson, MD of Net Benefit, a London ISP.
BT, which already offers a "traditional" Internet service - BT Internet - is "surprised" at the industry's reaction. Kevin Piper, head of communications and multimedia marketing at BT, doesn't understand why the move is viewed as an abuse of position. "What we're doing is making it easier for people to get onto the Internet without having to worry about complex relationships [with ISPs]."
But Adam Daum, senior consultant at industry analyst Inteco, believes BT's plan is an ingenious marketing ploy that could strip up to 40 percent out of the traditional ISP market. "It's quite understandable why the ISPs are upset. We've done some investigation and estimate that up to 40 percent of Internet users in the UK would save money if they switched to BT's planned service." Daum adds: "The corollary is that the people most likely to leave are the most profitable group because they are the light users - they don't tie up bandwidth but they pay their subscriptions, same as heavy users."
Daum sees BT's service having faults - there's no email, no Web space and no newsgroup offering - but he praises BT's efforts to "reduce the barriers to the Internet". However, he is concerned that with, effectively, two Internet services, BT's competition will be at a significant disadvantage: "The caveat here is if someone is coaxed by BT onto this service it can monitor their Internet useage. Once it goes up it can then offer BT Internet which is better suited to heavy use. Can another ISP do that? No."
"This sounds like a good service" says Daum, "but the wider issues are the effects on other players and BT's ability to exploit its position by switching the user to another of its services."
ISPs are looking to the telecoms regulatory body, Oftel, to intervene with BT's plans. A spokesman for Oftel refused to comment saying the organisation did not comment on trials.