France’s Autorite de Regulation des Telecommunications (ART) dealt a blow to the rise of the subscription-free internet access model yesterday by cutting the amount of money telcos can receive for handling internet calls. Internet service providers have condemned the decision, as it essentially prevents them making any money from creating net traffic. Many may have to look to new business models.
In recent months, France has seen the subscription-free model spill over the Channel from the UK, where scores of ISPs make their revenues by taking a slice of the metered charge users pay to dial in. British Telecommunications Plc, as the originating network operator in 80% of cases, has to pay the terminating operator a percentage of the total call charge, which it then shares with the ISP partner. In the UK, when BT complained to the local regulator, Oftel recommended no immediate change.
However, the French regulator has recommended the closing of the loophole that allows these ISPs to thrive. It found that the terminating network operator should receive just 3.8 centimes (less than $0.01) per minute, whereas ISPs claim they need at least 4 centimes in order to break even. Cegetel SA, a telco joint venture between BT, Mannesmann AG and the Vivendi Group, intends to launch subscription-free ISP services in France for content/distribution partners including Sega Enterprises Ltd and Dell Computer Corp. It demanded at least 6 centimes per minute, in order to make the service profitable, and now may have to fund the service through advertising or use it as a publicity-raising money loser.
As an alternative, ART suggests that ISPs use the toll-free 0860xx-prefix numbers for dialup, and bill the customer for a flat monthly fee which includes calls and access. This would signal a move toward a US style of unmetered internet access, the type which is being actively campaigned for by users across Europe. The deal proposed by ART has users paying 100FF (around $16) for 20 hours access over France Telecom lines to the ISP of their choice. But for now, the ISPs and phone companies seem reluctant to let go of the per-minute way which they bill their customers. A spokesperson for Cegetel said the toll-free model currently has no viable economic offering.
But ART said in a statement: these decisions are favorable to the development of the internet. Campaigners such as Internet Moins Cher (Cheaper Internet), meanwhile, criticize ART’s 100F/20hr model for not going far enough. The French ruling could effectively isolate France in Europe for the time being on ISP pricing. The model is already firmly established in the UK, and is rising slowly in Germany. Some Spanish operators are predicting subscription-free access could see the total online population rise from two million to seven million by the end of the year.
