The UK's largest telephone company, BT, is to offer its customers - and those of other internet service providers (ISPs) - unmetered access to the internet for a fixed monthly fee.

The move comes as BT has been put under pressure by the government and its rivals to reduce the cost of using the internet - in order to spur the development of online services in Britain.

Unmetered access means that people will be able to surf the net for as long as they want, without worrying about mounting telephone bills. The existence of such a system in the United States is seen as a key reason why twice as many people use the internet in America as in the UK.

Under BT's plan, anyone who surfs the net for more than one hour a day, outside of working hours, is likely to find the offer attractive.

Cheaper at weekends

Under BT's proposed new service, called BT Surftime, customers could gain unlimited access to the internet at off-peak weekday times for �6.99 per month, or �13.98 for weekend and off-peak usage.

Full unmetered access, without any restrictions, would be available for �34.99, under proposals which could come into effect in January, subject to regulatory approval.

BT will also offer a variety of tariffs, including a half-price reduction in the cost of peak calls to the internet, as well as the flat rate package.

"New customers should no longer feel inhibited from using the internet for reasons of cost," BT said. "BT Surftime is the most significant development for the Internet in the UK."



Threat to other ISPs

But the BT tariff will only be available to BT customers, and those other internet service providers (ISPs) who have agreed a new revenue sharing deal with BT.

At the moment, most of the free ISPs in the UK use another telephone provider, and fund themselves mainly through a proportion of the interconnect revenues that operator gets from BT.

When BT unveiled its proposed cheaper access for ISPs last month, it was widely criticised in the industry as being designed to drive many rival ISP services out of business.

There are already some other ISPs that offer a free service at weekends, and others that are planning to charge a flat rate.

The Campaign for Unmetered Telecommunications (CUT) immediately welcomed the announcement, but said the price for unlimited access was still too high.

"As long as there are no strings attached we welcome BT's announcement," said Erol Ziya.

BT's charges would still be higher than those in the United States, where unlimited access through a high-speed DSL line or a fibre optic cable typically costs around $40 (�25) a month for much quicker service.

Regulator steps in

BT's move was prompted by the desire of the telecommunications industry regulator, Oftel, to lower internet charges.

Oftel has argued that heavy internet users are vastly over-charged for the service, as the marginal cost of keeping a telephone line open is well below the 1p minimum charge for local calls that is currently applied.

Now Oftel says that it will allow internet service providers to charge customers a lower pence-per-minute rate for their customers.

Under "two-part charging", companies will be able to separate the initial charge of setting up a call from the cost of maintaining the connection for its duration - thus reducing the cost of the longer internet calls to below local rates.

"Splitting internet call charges into two parts ... will more accurately reflect costs and result in cheaper internet calls," said David Edmonds, Oftel's Director-General.

Oftel is also to introduce two new numbers for internet access only - 0844 and 0871 - for the new charging structure.