UK Web users won’t reap benefit of OFTEL decision on call charges

The Register gives its view of watchdog's ruling

There has been a mixed reaction to OFTEL's announcement that there should be no immediate change to the way the cost of telephone calls to the Internet are divvied out between telcos and ISPs. Many industry insiders have welcomed the news that OFTEL is proposing to abolish a minimum call charge as a way of increasing competition among providers. But it is those ISPs which still offer subscription-based services which are more likely to benefit from any future competition since they will be better placed to forge deals with telcos and set dial-up charges below the current local call rate. And they can only do that because they are gaining revenue partly by a small subscription charge bolstered by earnings from reduced interconnect charges. Spokeswoman Rachel O'Neil, said AOL UK had no plans to pass on the saving it already gets to its members insisting instead that this money is ploughed back into the company to improve its network infrastructure. But Nick Wells, marketing manager of ISP ClaraNet said OFTEL's announcement was a "healthy move". The company is already a step ahead of the competition after recently introducing ClaraCall a subscription-based service that cuts the cost of calls by up to 40 per cent. "We might even be in the position to cut the cost again," said Wells. Unfortunately, such a move will be harder for subscription-free ISPs to introduce as they rely on their cut of each telephone call for revenue. It's a view upheld by David Clarke, head of Virgin Net -- which recently announced the launch of its subscription free service -- who said he has no plans to take advantage of this new freedom. The money Virgin Net receives from the interconnect charge is used to fund the service, he says, and makes up for the loss of revenue from dropping subscription charges. A spokesman for BT -- which originally asked OFTEL to investigate the pricing arrangements -- said the company would not comment on the proposal until it had time to digest the report. ® The Register’s opinion Yesterday's announcement by OFTEL to do next to nothing with call charge rates for Net users makes even the dampest of squibs seem explosive by comparison. At least by maintaining the status quo OFTEL can't be accused of rocking the boat. Yet some industry commentators have said the cost of Net access will tumble over the coming years once new pricing structures are introduced to promote tariff competition. Others have said that "free" Net access will become "freer" as service providers pass on their cut of the interconnect charge to the consumer. Sure enough, OFTEL's proposals may well lead to greater competition among providers. For ISPs, it will probably mean that they will have to offer different packages to suit different needs. Subscription-free services will favour light users; subscription-based services offering cheaper phone calls for heavier users. For consumers, tough, it will mean that choosing an ISP will get harder. Confusion, it seems, will reign supreme and it will be down to the poor old consumer to navigate the maze of different pricing plans and find one that suits them. Which is why anyone who believes that OFTEL's proposals will provide a sizeable fillip to electronic commerce in the UK is simply mistaken. How can government, regulators, telcos, ISPs and fledgling e-commerce companies expect any form of significant progress in the wired world when every time e-punters log on to the Internet they've always got one eye on the clock? ®

Sponsored: Driving business with continuous operational intelligence