Ref: 47/02
Date: 18 July 2002

Oftel has today ordered BT to cut the cost of its wholesale unmetered Internet access prices by eight and a half per cent.

The requirement is set out in a final Determination published today by Oftel. The findings are based upon a review of the volume of unmetered Internet traffic over BT's network since BT's wholesale Internet access was launched two years ago.

Other telecoms operators buy wholesale Internet capacity from BT and use it to provide unmetered Internet access directly to consumers. This allows them to compete directly with BT in the retail market for Internet access.

David Edmonds, Director General of Telecommunications, said today:

"UK consumers continue to benefit from some of the cheapest unmetered Internet access prices in the world. Over four million UK households use some form of unmetered access to get online.

"Oftel must ensure that the charges BT make to other operators for Internet capacity on its network are fair and reflect BT's costs.

"Until now, Oftel has had to use estimates to assess BT's charges, but new information on BT's Internet traffic volumes is now available, enabling Oftel to reassess these charges.

"As a result of its review, Oftel has today ordered BT to cut the cost of its wholesale unmetered Internet access for other operators by eight and a half per cent.

"This reduction means that operators can now buy capacity from BT cheaper than before. Operators have the opportunity to pass these savings on to ISPs and through them to consumers.

"Unmetered Internet access is often a stepping stone to broadband. New broadband connections are running at around 20,000 per week. Oftel estimates that total broadband connections should reach 750,000 by the end of July."

Notes to editors:

1. Review of adjustment ratio for DLE FRIACO is available on Oftel's website at www.oftel.gov.uk/publications/internet/2002/dlefriaco0702.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 has altered the adjustment ratio for DLE FRIACO. The adjustment ratio affects the price operators pay for DLE FRIACO. Oftel's measures will reduce the price of DLE FRIACO by approximately 8.5%.

3. Oftel proposed a reduction of 7% to the adjustment ratio in its consultation document that was published on 20 February 2002
(see www.oftel.gov.uk/publications/internet/2002/fria0202.htm). The additional 1.5% reduction is explained by the use of updated traffic information for February and March 2002.

4. The changes only apply to the cost of DLE FRIACO, not Single Tandem (ST) FRIACO. ST FRIACO has only been available since February 2001 and there is currently insufficient data to conduct a review. Oftel will review the adjustment ratio for ST FRIACO when more detailed information on traffic patterns becomes available.

5. Oftel has published several other documents relating to FRIACO. These are all available on Oftel's website at www.oftel.gov.uk/publications/internet/ .