Ref: 26/02
Date: 15 May 2002

Oftel has today introduced a further measure to help reduce the cost to operators of obtaining unmetered internet access from BT.

BT must in future charge operators in arrears for providing unmetered Internet access, instead of the current arrangements where operators have to pay in advance.

The changes will apply retrospectively from the start of the Flat Rate Internet Access Call Origination ("FRIACO") service. BT will therefore have to refund to operators the additional costs they have incurred by having to make advance payments.

The new arrangements will also result in savings for operators on future FRIACO payments.

The new charging arrangements are in line with BT’s arrangements for charging for metered Internet access, where operators pay in arrears for capacity.

David Edmonds, Director General of Telecommunications, said today:

"Currently 4 million UK consumers benefit from some of the lowest unmetered internet prices in the world. Unmetered access is often a stepping stone to broadband. New broadband connections are running at around 20,000 per week, although consumers should continue to benefit from competition in the narrowband market.

"To compete effectively with BT where it has market power, operators have to be offered fair and reasonable terms for wholesale products and services, and Oftel will always take action when necessary to ensure that this happens.

"Oftel ordered BT to provide a wholesale unmetered Internet access service for operators, and we have today taken further action to ensure that operators pay for it on terms that are equivalent to those for metered services.

"Under BT’s original arrangements for unmetered Internet access, operators had to pay in advance for the capacity they required.

"Under Oftel’s new arrangements, operators will pay in arrears for unmetered Internet access. This is in line with BT’s charging arrangements for metered Internet access, and will make it easier for operators to manage their payments for unmetered Internet access.

"Oftel has decided that these arrangements should be retrospective, so BT will have to refund to operators the additional costs they incurred from having to make advance payments.

"Oftel’s action will also bring further future savings to the operators, which they may pass on to consumers."

Notes to editors

1. Amendments to the FRIACO Direction is available on Oftel’s website at. www.oftel.gov.uk/publications/internet/2002/stfriaco0502.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. The Direction obliges BT to supply services to other operators in response to fair and reasonable demand, sets out the circumstances in which BT must convert an operator’s metered network capacity into ST FRIACO where requested, and clarifies BT’s ability to charge for the routing of Internet calls within its exchanges.

3. This statement follows on from a consultation document Consultation by the Director General of Telecommunications on amendments to the FRIACO Direction - 28 January 2002 - see www.oftel.gov.uk/publications/internet/fria0102.htm.

4. The original Direction, requiring BT to make FRIACO available to operators from its local exchanges, was published on 26 May 2000. This was amended by a second FRIACO-related Direction published on 15 February 2001, which required BT in addition to supply FRIACO from its tandem exchanges.