Much more like it! (17 November 1999) OFTEL has issued a document Pricing of calls to the Internet: possible initiatives to bring about more appropriate and flexible tariffs. Hardly a snappy title, as ever, but the contents are very important. At long last OFTEL has recognised that: Internet access from home, at the moment, is too expensive. current tariff structures are not good enough. for heavy Internet use metered interconnect charging, against which we have campaigned long and hard, is not appropriate. for less heavy Internet use further changes to metered interconnect charging and tariff structures, apart from those already proposed, may be needed. It also implies that the changes proposed by BT fall short. Crucially, OFTEL is encouraging negotiated agreements to buy call time in blocks rather than per-call, per-minute. It will step in to fix a tariff structure if, for example, an ISP makes a reasonable proposal to a telecommunications operator which is rejected. This is all very encouraging, and we are delighted that our solution to the interconnect problem is now OFTEL policy, but we have a few concerns: General omission of the word 'shall'. That said, such tremendous pressure has built up for unmetered access negotiated agreements may work and a formal mandate may not be necessary. heavy (Internet use) is not defined. OFTEL's arguments for maintaining the factor of 4 differential between peak and off-peak per-minute rates seem weak, especially given the statement in a previous paragraph that it is therefore not possible, ex ante, to establish whether the price for peak period services is excessive in relation to that of off peak services. OFTEL suggests that the marginal cost of conveying a long-distance call across the BT network is 0.3 to 0.4p per minute. It admits that this is guesswork - we would take uncertainty in a scaling factor of around 1 to 3 as meaning just that - but we've just been contacted by Professor Nicholas Economides of the Stern School of Business at the University of New York. His analysis found the US figure for local calls to be about $0.0022 (0.14p) per minute. We have said that encouraging Internet access by (disguised) long- distance calls is technologically, logically and financially absurd (6.12.3) ...