Update: Oftel's ruling to bring 'second wave' of price cuts

The Oftel ruling Friday that forces BT (quote: BT) to sell a wholesale version of its unmetered access package, SurfTime will spawn a second wave of cheap access deals according to experts Tuesday.

Oftel's decision, in effect opens up the 'last mile' connection from BT's local exchange to consumers' homes, allowing ISPs to offer their own SurfTime alternatives.

Ovum analyst Tim Johnson says the decision will pave the way for a second wave of Alta Vista-style deals. "Absolutely this will allow low prices," he says. "ISPs can start offering all the Internet you can eat for £10 a month."

Under the new rules, which start Thursday, ISPs and other operators will be able to offer unmetered services direct from users' homes for an annual fee to BT of £424.25 per circuit. Johnson suggests that ISPs will have around 10 users per circuit and predicts average monthly charges to the consumer will be around £10 per month.

From launch, BT's SurfTime service has attracted controversy for being too costly and complicated. ISPs complained there were hidden costs to the SurfTime service. Analyst with research firm Gartner Group, Adam Daum, explains: "The [original] SurfTime fee only covered one part of the network. ISPs didn't know what the costs of the other bit of the network would be. They were going into it blindfolded," he says. With Oftel's ruling, that problem has now been eradicated Daum believes.

Sources believe BT has battled vehemently against the introduction of a wholesale SurfTime alternative, which it believes dilutes its own offering. Despite its disappointment the telco is magnanimous in defeat. "We have always said that there is no necessity for emulators of SurfTime. Although we have no objections in principle to a wholesale version we probably wouldn't have introduced it now, " says a spokesman. "But we have to do what Oftel says."

AOL, a seasoned campaigner against BT in the battle for unmetered access is delighted with the ruling, describing it as a "seismic shift in the telecoms landscape." "Consumers will now have the cheapest unmetered prices in the world," a spokesman says.

With the launch for SurfTime still planned for Wednesday -- the same date BT has to launch a wholesale version -- there is frustration from the telco that Oftel has made its decision late. "It came at 7.15 on a Friday night before a bank holiday and three days before we are launching another service," says a spokesman.

Despite the timing, AOL believes the watchdog deserves praise. "It faced a great deal of pressure from BT. BT did not want this. They have moved pretty damn fast for a regulator," says the spokesman.

The magic Internet access price established by Demon eight years ago when it was actually called Tenner A Month -- will give you unlimited evening and weekend access through your favourite ISP. Let Guy Kewney explain everything. Go to AnchorDesk UK for the news comment.

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