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Oftel plans changes to unmetered Net access

Watchdog wants ISPs to be able to buy unmetered Internet capacity on credit - but this may not be enough to stop price rises for Web access
Written by Graeme Wearden, Contributor

Regulatory changes proposed by Oftel on Monday may make it easier for Internet Service Providers to offer unmetered access to the Web.

The telecoms watchdog believes that a number of adjustments should be made to the way that BT provides flat rate Internet access call origination (Friaco) -- the wholesale product that allows ISPs to give their customers Internet access for a fixed fee per month.

This will include changes to the way that ISPs pay for unmetered Internet access. Currently they must pay in advance, which some in the industry see as unfair because ISPs pay in arrears for metered capacity -- where customers pay per minute for Internet access. "We're proposing a change to the payment terms for Friaco, so it is paid for the same way as BT's metered package," explained an Oftel spokesman on Monday.

Oftel is also suggesting changes to the way that BT provides extra Friaco capacity, which could help ISPs who are seeking additional connections in local exchanges where there is no spare capacity.

A BT spokesman said that while the telco welcomed some of Oftel's proposals, it was concerned that abandoning the up-front charge might encourage some ISPs to order excessive amounts of unmetered capacity. "This might lead to additional pressure on capacity," he said. He added that BT would issue a full statement once it has studied the proposals.

Oftel's move comes at a time when there are increasing concerns that Internet access prices in the UK are set to rise. The telecoms market has been suffering for many months, and companies have regularly complained that it is extremely difficult for them to find necessary funding.

John Pluthero, chief executive of Freeserve, told the Financial Times that many of the larger Internet service providers may be forced to raise their prices this year.

Before Friaco was introduced, ISPs that launched an unmetered Internet access product still had to pay BT for every minute that their customers were online. Such a business model was unsustainable, and led to the collapse of several ISPs.

The deadline for comments on Oftel's proposal is 25 February.

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