Ref:    14/01
Date:  15 February 2001

A further major initiative to support the provision of unmetered Internet access in the UK and to provide greater choice for consumers has been confirmed today by Oftel.

BT will be required to offer other operators a new wholesale unmetered Internet access product known as ST FRIACO (Single Tandem Flat Rate Internet Access Call Origination) from 26 February 2001.

Under the new arrangements, operators will be able to offer consumers unmetered Internet access by connecting with BT’s network at its main regional exchanges for a flat rate annual fee.

ST FRIACO is a significant addition to the current FRIACO product which Oftel has required BT to provide since June 2000. The current FRIACO product conveys Internet calls to BT's local exchanges. ST FRIACO conveys them across BT's network to the operator’s own telephone network.

Increasing the range of wholesale products available to operators should boost competition in the provision of unmetered access. It will mean that a greater number of consumers will be able to get unmetered Internet access more cheaply and easily than before.

Operators will be able to compete more effectively with BT and each other in offering a greater variety of unmetered Internet access services, some of which might not otherwise be available to consumers.

Oftel recognises that, in the short term, capacity at the main exchanges will be limited. Therefore the decision includes measures to ensure that BT's network is able to handle the anticipated increased amounts of Internet traffic and that capacity is used as efficiently as possible.

BT will also be required to take steps to ensure that all reasonable demand for ST FRIACO can be met without limitation from February 2003.

Under the Direction published today by Oftel:

• BT must supply a wholesale unmetered Internet access product to carry other operators’ traffic from the customer’s home, via BT’s network to the point of inter-connection with the other operators network. In the short term, this requirement will be subject to certain measures to avoid overloading BT’s main regional exchanges.

• BT must take steps to ensure that its network will be able to meet all reasonable demand for ST FRIACO, without limitation, from February 2003.

In addition, Oftel will work with the industry to establish a new interconnection regime for Internet traffic carried over dedicated IP networks which are generally considered as more efficient at carrying Internet traffic than existing voice networks.

Announcing the proposals, David Edmonds, Director General of Telecommunications said today:

"A year ago there was no unmetered access to the Internet in the UK.

"As the Internet has become increasingly popular, demand for unmetered Internet access has grown. Oftel has taken a series of actions to enable other operators to compete effectively with BT to supply unmetered Internet access to consumers.

"30% of UK homes now have access to the Internet with a third of these using some form of unmetered access. Oftel’s latest benchmarking study shows that prices for residential Internet users have fallen by over 40%.

"Today’s decision should ensure that UK consumers continue to have some of the widest choice and lowest prices for Internet access in Europe. It should encourage more UK consumers to take advantage of the Internet without the worry of running up high telephone bills.

"In requiring BT to provide operators with ST FRIACO, I have taken account of concerns that capacity on BT’s network may be scarce in the short term.

"Initially, BT and the other operators will be required to co-operate to make the best use of existing capacity. This will allow consumers to start benefiting from the service and give BT time to make the necessary changes to its network so it can offer the product on an unlimited basis as soon as possible.

"This decision creates the potential for more UK consumers to benefit from a wide range of cheaper Internet services in the future."

Notes to Editors

1. Determination on future interconnection arrangements for dial-up Internet in the United Kingdom is available from Oftel’s website at www.oftel.gov.uk/competition/fria0201.htm. Copies are available to the media from Oftel’s Press office on 020-7634 8991 and to the public from the Research and Intelligence Unit on 020-7634 8761.
2. On 26 May 2000 Oftel issued a Direction requiring BT to provide the necessary services to enable other operators to supply unmetered Internet access over its local loop. Oftel made the Direction to resolve an interconnection dispute between BT and MCI Worldcom. Oftel required BT to offer FRIACO (Flat Rate Internet Access Call Origination), whereby other operators’ Internet access traffic is conveyed from the customer to BT's local exchange at a flat rate tariff. However Operators usually interconnect at main regional network switches – known as tandem switches. BT argued that it could not supply an unmetered wholesale service to these switches because it was concerned that the additional Internet traffic it generated would overload its network. In March 2000 Oftel commissioned a panel of technical experts to consider the impact of the growth in Internet traffic on BT’s network and what action could be taken to cope with this growth. The experts report was published on 13 November 2000 together with a consultation document setting out Oftel’s proposals.
3. In today’s Direction Oftel sets out solutions and conclusions in respect of future interconnection arrangements for dial-up Internet in the United Kingdom.

Back to Press Release Index