Ref: 07/02
Date: 29 January 2001

The UK has a competitive dial-up Internet access market with a wide range of unmetered and metered services available to consumers at low prices, Oftel’s review of the Internet market has concluded.

The findings of Oftel’s review of the Internet access market are published today. Oftel has also published some of the research which helped inform Oftel's conclusions.

Oftel's lastest figures show that 45 per cent of UK households are connected to the Internet, compared to a figure of 30 per cent at the same time last year.

Oftel’s review of the Internet access market looked at narrowband dial-up Internet access using the PSTN, but not broadband Internet access using DSL, unbundled local loops or cable modem services.

David Edmonds, Director General of Telecommunications, said:

"Oftel’s review of the Internet access market shows that consumers have access to a wide range of services and prices for using the Internet that are among the best in the world.

"Oftel’s latest research shows that 11 million UK homes – 45 per cent – are connected to the Internet, including four million homes using unmetered Internet access.

"Dial-up narrowband Internet access is how most consumers start using the Internet, so it is important we have a thriving and competitive Internet access market.

"Dial-up Internet access also acts as a stepping stone to faster broadband services as people use the Internet to study, shop and for entertainment.

"Action by Oftel, notably the requirement on BT to offer wholesale unmetered Internet access, has helped to put this flourishing market in place. The network charge control also offers robust protection to consumers."

David Edmonds said that Oftel will take forward a number of initiatives to support Internet takeup and improve customer satisfaction.

"Oftel will publish a new consumer guide to help people choose the right Internet access service for their needs."

Notes to editors

1 Effective Competition Review: Dial-up Internet access is published on Oftel's website at www.oftel.gov.uk/publications/internet/imr0102.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 Oftel's latest consumer research is published on Oftel's website at www.oftel.gov.uk/consumer/research/index.htm.

3 The review sets out the results of two separate consultations: Effective Competition Review: dial-up Internet access and Effective Competition Review of Internet Connectivity

4 Oftel’s review drew the following conclusions on competitiveness in four different parts of the Internet access market:

• Residential and business retail dial-up services. Effectively competitive as prices compare with the best in the world with a wide range of flat rate and pay-as-you-go packages available.

• Wholesale call origination (which includes Internet call origination) – carrying calls from the home or business onto the telephone network. Not effectively competitive as BT has market power with an estimated share of over 80 per cent. Network charge controls and requirements on BT to provide wholesale products protect consumers and enhance competition.

• Wholesale Internet call termination. Not effectively competitive as BT has an increasing market share. Existing controls in this area will therefore remain in place. BT and the industry are currently negotiating a wholesale IP interconnect product that could affect market structure. Oftel is working hard to facilitate a succesful outcome.

• Wholesale Internet connectivity. Effectively competitive as wholesale prices are falling with a considerable number of suppliers with no one operator having market power.