The changes will help to ensure that BT supplies this service to other operators in response to fair and reasonable demand.

One of the most significant proposals is that BT has to offer payment terms for unmetered Internet access that are the same as those for metered access.

Currently an operator has to pay BT in advance for unmetered capacity, whereas metered capacity is paid for in arrears.

Other issues covered in the consultation document published today include the circumstances in which BT must increase network capacity to handle Internet traffic, and BT's ability to charge for the routing of Internet calls within its exchanges.

Most of the proposals apply only to those operators who buy the wholesale product ST FRIACO - Single Tandem Flat Rate Internet Access Call Origination - from BT.

David Edmonds, Director General of Telecommunications, said today:

"The UK was the first European country to introduce FRIACO and it has led to some of the cheapest prices for Internet access in the world. Calls to the Internet now make up over 40% of all traffic carried across the UK's telecoms networks.

"Over four million UK homes now use unmetered Internet access and Oftel must ensure that demand can continue to be met.

"The proposals announced today further support the development of unmetered Internet access in the UK by clarifying the obligations on BT. The measures will ensure other operators can continue to use ST FRIACO to deliver unmetered Internet access to consumers.

"Oftel is seeking the views of the industry and other interested parties on these proposals before making a final decision later in the year."

The consultation period runs until 25 February 2002.

Notes to editors

1. Consultation by the Director General of Telecommunications on amendments to the ST FRIACO Direction is available on Oftel's website at www.oftel.gov.uk/publications/internet/fria0102.htm. Hard copies are available to the media from Oftel's Press Office on 020 7634 8991 and to the public from Oftel's Research and Information Unit on 020 7634 8761.

2. This consultation document follows on from previous documents published by the Director in connection with FRIACO:

(i) Determination of a dispute between BT and MCI Worldcom concerning the provision of a Flat Rate Internet Access Call Origination product (FRIACO), 26 May 2000 - see www.oftel.gov.uk/publications/internet/fria0500.htm;

(ii) Proposals for Network Charge and Retail Price Controls from 2001, and Corrections, February 2001 - see www.oftel.gov.uk/publications/pricing/pcr0101.htm and www.oftel.gov.uk/publications/pricing/pcrc0201.htm;

(iii) Determination relating to a dispute between British Telecommunications and Worldcom concerning the provision of a Flat Rate Internet Access Call Origination product ("FRIACO"), 15 February 2001 - see www.oftel.gov.uk/publications/internet/fria0201.htm;

(iv) Guidance as to how the Director General will consider whether British Telecommunications has acted reasonably in the provision of Single Tandem FRIACO, 18 July 2001 - see www.oftel.gov.uk/publications/internet/fria0701.htm; and

(v) Notice under Section 16(5)(a) and (b) of the Telecommunications Act 1984 (Notice relating to provision of ST FRIACO), 27 September 2001 - see www.oftel.gov.uk/publications/internet/triv0901.htm.