Oftel has launched a competition inquiry into BT’s unmetered Internet access package.
UK telecoms regulator Oftel has launched a formal competition inquiry into the pricing of BT’s SurfTogether unmetered Internet access package. The package is scheduled to begin this Friday despite the investigation, which is likely to take several months.
BT SurfTogether offers unlimited Internet connection to BT-affiliated ISPs during evenings and weekends for GBP15 per month including line rental. For an extra GBP3 users can have unlimited Internet and local calls. It is bound to be popular, as it builds on the BT Together offer that was launched last year, attracting seven million users. Many BT Together customers are likely to switch to the new service, as line rentals are expected to rise.
In some ways, the Oftel investigation is strange. BT had little choice but to offer the package; in September AOL UK, the country’s second largest ISP, announced an unmetered access package priced at GBP15 per month. FRIACO (Flat Rate Internet Access Call Origination) will allow any operator to provide competitive flat-rate packages.
Other operators have already announced FRIACO offerings at similar rates to BT. In addition to AOL, Freeserve and cable firm NTL both offer unlimited access for GBP10 per month, or free when spending GBP10 on voice calls. As soon as these offerings no longer need to be subsidized to cover BT’s per-second charges, there will be almost as many unmetered packages as there are already ‘free’ non-subscription packages. FRIACO will open up the way for more competition, allowing more ISPs to provide a profitable service
In addition, with the unbundling of the local loop, and the rollout of competing broadband services, BT would have otherwise struggled to keep its customers in the long term. Datamonitor predicts that 5% of UK households will already have broadband access by 2002, by which point unmetered narrowband access will be the norm rather than anything special.
Overall, it is hard to see the anticompetitive element in this deal. By the time Oftel reports, the unmetered Internet access market will be substantial and competitive. Regulatory intervention in this case is both unnecessary and unlikely.
