The announcement in March 2000 that AltaVista would be offering unmetered Internet access in the UK triggered a multitude of offers from competing Internet
Service Providers. It seemed that within a matter of several months a large portion of United Kingdom Internet users would
be enjoying unmetered access at a reasonable price.
Sadly, this has not yet happened.
Many ISPs which initially offered unmetered access have closed down their services: AltaVista was publicly humiliated when
it recently announced the termination of its widely-advertised offer without ever implementing it although 270,000
customers had signed up for the service. Moreover, when unmetered access is available, users may have experienced long
delays in registration, found difficulty getting online, or experienced poor service quality. As a result, many users are
extremely angry at being misled by ISPs who have not delivered on their promises of high-quality unmetered access at a
reasonable price.
ISPs have blamed their problems on the fact that they were offering unmetered access to the user which was based on
wholesale services that required a metered payment from the ISP to BT.
That is indeed the fundamental problem, but it is clear that ISPs plunged into offering unmetered access without adequately
examining the economics of doing so and without understanding how UK Internet users would behave when switching from
metered to unmetered access. Factors that ISPs should have taken into consideration, but apparently did not, include:
- The ongoing availability of Internet access charged at local call rates meant that people who used the Internet for
less than roughly fifteen or twenty hours per month would have little interest in signing up for an unmetered service,
possibly priced at £10pcm or more, unless they were taught how switching from metered to unmetered access would enable them
to get much more out of the Internet in future. Little, if any, such education took place.
- This meant that Internet users running up high metered charges were the first to sign up to unmetered services,
increasing average usage per user to very high levels very quickly.
- Increases in usage were underestimated, mainly because of the marketing failures detailed previously and overconfidence
by ISPs but also because, it seems, there was no attempt to pool existing data and draw conclusions: there was some
unmetered access in the United Kingdom from well before the AltaVista announcement.
- ISPs, being accustomed to relatively low usage per metered user, were poorly prepared for sudden increases in usage and
lacked adequate modem capacity. This made it more difficult for unmetered users to get online. More importantly, however,
it meant that once one such user got online, he or she stayed online in order to keep the connection live even if there was
no need to be online continuously. This pushed average usage per user yet higher and degraded service quality.
- Some ISPs did not take adequate measures to prevent more than one user using the same account at the same time, pushing
the average usage per user even higher.
- The best solution to usage and service quality problems would have been for ISPs to install large numbers of modems
very quickly. Unfortunately, they discovered that they were losing money on unmetered services due to the very high average
usage per user so decided to slow down both the rate at which new subscribers were added - affecting income - and the rate
at which modems were installed - annoying existing users through not appearing to tackle technical problems.
- Furthermore, ISPs hoped that users would be prepared to remain on services charged at local call rates while waiting
for a true underlying unmetered product (FRIACO) to become available from BT. They also hoped
that FRIACO would solve the ongoing problem of runaway underlying metered costs for heavy users, but did not plan for
lengthy delays in implementing FRIACO as has been the case.
- The combined effects of constraints on new subscribers, technical problems, uncontrollable underlying metered costs,
and non-appearance of FRIACO led some ISPs to throw in the towel and close down unmetered services.
- These closures increased the pressure further on ISPs still with unmetered services as they were forced to cope with
unexpected onslaughts of potential subscribers.
To our knowledge no ISP tried to explain the situation described above to its users; we believe that doing so, together
with a suggestion of users voluntarily restricting their usage until FRIACO was finalised, would have saved jobs and
reputations as well as enormously increasing pressure on BT, OFTEL and others involved in the FRIACO negotiations.
We believe that some ISPs, such as 24/7 Freecall, World Online and NTL [BT subscribers], which currently offer unmetered services not using BT SurfTime or cable networks, will
continue to offer them with hidden subsidies to cover underlying metered costs. Today's unmetered users are tomorrow's
xDSL, cable modem and third-generation mobile phone users: these users, even if expensive for the present, have
considerable future value if kept happy.
However, the unmetered agony of both consumers and ISPs will continue until end-to-end unmetered services based on FRIACO are deployed across the United Kingdom. It appears that both MCI Worldcom and Energis will soon be offering FRIACO-based connectivity to their affiliated ISPs. We hope that the long wait for true unmetered access in the UK will soon be over; only then will the agony end.