|Campaign for Unmetered Telecommunications|
A price war has broken out in the United Kingdom amongst Internet Service Providers. The 'free' Internet access business model pioneered by Freeserve wherein subscribers only pay the metered cost of local calls is now rapidly giving way to the unmetered business model where there are no per minute usage charges, 24 hours a day, 7 days a week. More than 40 unmetered ISP offers have been announced as of the beginning of May 2000 and additional offers, from some of the largest UK ISPs such as AOL, are expected to be announced shortly.
Unmetered ISP access has been on offer in the UK for more than a year now, but it did not then form a mainstream business model because the initial offerings were by smaller ISPs with limited resources.
Unmetered offerings from screaming.net and The X-stream Network were quickly swamped by eager subscribers and the companies were forced to limit their number of customers, so most UK ISPs dismissed the unmetered model as being unprofitable and therefore not a competitive threat. This perception was profoundly altered when, on 7 March 2000, AltaVista announced it would be offering unmetered Internet access in mid-2000 for an annual charge of £10 to £20 and a one-time setup cost of £35 to £50. Cable provider NTL weighed in shortly thereafter and announced that it was offering unmetered Internet access from mid-April 2000 onwards, both over its cable network and via a Calls and Access number over existing BT lines. The only requirement was subscribers would have to spend at least £10 per month on non-Internet voice calls over NTL's network.
The impact of these two announcements from major companies with significant financial resources has been to force competing ISP's to swiftly follow suit or be forced out of business. The multiplicity of offerings by substantial companies means that unmetered access will no longer be capacity constrained in the UK. This, incidentally, leapfrogs the UK ahead of the US in Internet accessibility because the US has many rural areas where ISP's can not be reached via a local call whereas in the UK access is possible via a national 0800 or Calls and Access number.
We are extremely pleased with the increasing availability of unmetered Internet access in the UK. However, we are also seriously worried about the long term sustainability of such unmetered access and about the limitations it places on the subscriber's choice of telecommunication services. The only true unmetered offerings to date in terms of their underlying cost basis are the cable access offers from NTL and Telewest. All other offers are overlaid on a metered service from BT and will entail the ISP paying for metered call costs out of its own pocket. Assuming the average subscriber is online between 15 hours and 30 hours a month, this will result in considerable monthly payments to BT. To recoup some of the call expenses, many ISPs offering unmetered access are requiring subscribers to divert their voice calls to an affiliated Calls and Access telephone service provider through a 'magic box' attached to the phone line. Monthly minimum spend applies for these calls, usually £10. The consequence is that the consumer is forced to accept the Calls and Service provider bundled with the ISP.
Initial reports of poor accessibility and service quality experienced by users signing up for unmetered ISP offerings are not surprising given the level of pent up demand. However, there are also highly encourging reports for some of the larger services and we believe the accessibility and service quality issues will be quickly addressed and corrected.
Text by Charlie Sands
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