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AOL chiefs are super smug

Victorious crusader in a struggle for unmetered Net access?

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AOL UK is displaying all the smugness of a US president elect who was told he was going to lose the election by the all-knowing TV networks but, when the time came, overturned the opinions of pundits and delivered victory right on the button.

Sure, interest in today's announcement will focus on the fact that here is an unmetered product enabling people throughout Britain to access the Net for just £14.99 a month.

In fact, the only string attached to this "no strings attached" offer is that people will have to sign up to AOL UK - a proprietary service that is as restrictive as it is liberating.

Still, that's of little concern for the moment. More important, is AOL UK's desire to see itself as the victorious crusader - the winning candidate in a struggle for unmetered Net access in Britain.

And boy, does it make its point. A third of today's announcement was set aside to explain AOL UK's part in obtaining this holy grail.

Its tone is restrained jubilance interwoven in mocking condemnation for those who have failed along the way.

On the one hand it a dignified assessment of the events leading up to today - on the other, it's two fingers in the air followed by a play-ground-style taunt of "nah nah nee nah nah".

It's terrific stuff. All that's lacking is a fitting introduction. How about, "My fellow Americans..."

An extract from AOL UK's press announcement this morning

FRIACO - Flat-Rate Internet Access Call Origination

Flat Rate Internet Access Call Origination (FRIACO) is a wholesale flat-rate pricing methodology that represents a critical breakthrough in the development of the Internet economy by enabling US-style flat-rate consumer Internet access. It offers Internet Service Providers (ISPs) the only truly sustainable and economically viable nationwide and telecoms provider-independent unmetered pricing environment for consumer narrowband Internet access.

Prior to the introduction of FRIACO, ISPs wishing to offer flat-rate pricing were faced with three options. The first option attempted by a number of ISPs, AltaVista foremost amongst them, was to purchase capacity from network providers on a metered (ie charged by the minute) basis, while charging users an unmetered (ie fixed) fee for providing that access. The gulf between fixed income (the users unmetered fee) but unlimited costs (the amount paid to the network provider for every minute that user was online) exposed ISPs to substantial and uncapped financial risk, and led to the cancellation, curtailment or withdrawal of almost all of those ISPs offerings.

The second option was to use British Telecoms proprietary unmetered tariff, BT Surftime. The vast majority of UK ISPs (AOL UK included) have rejected BT Surftime for a number of reasons, including the fact that the tariff does not cover the full cost of the users unmetered connection to the ISP (therefore exposing the ISP to additional costs), and the fact that BT obliges consumers to commit to an unwieldy minimum three-month contract on a single nominated telephone line, at a time when consumers are looking for increased flexibility and mobility in Internet access.

The third option is only open to cable providers, reaching customers whose homes are wired up to the cable providers own network. The mass-market scope of this solution is severely limited by the low reach of cable in the UK.

For the last 18 months, AOL UK has fighting for an alternative to these three limited options, by instigating and leading a campaign for the right of UK consumers to experience the same kind of unmetered Internet access enjoyed by tens of millions of consumers in the US. The AOL UK 'Stop the Clock' campaign began to bear fruit in May when the UK regulator Oftel forced BT to begin offering a wholesale flat-rate tariff to its telecoms competitors.

That tariff, known as Flat Rate Internet Access Call Origination (FRIACO), was devised by economists commissioned by AOL UK in the Spring of 1999. The regulator mandated that BT the UK's former state monopoly telecommunications provider should offer this flat-rate tariff after reviewing a formal complaint from the telecommunications operator MCI Worldcom last December.

FRIACO makes a consumer flat-rate possible by requiring BT to offer wholesale, bulk Internet telephone access on an unmetered basis to other telecoms providers (known as Other Licensed Operators or OLOs), such as MCI Worldcom, Colt and Energis and many others. OLOs can buy bulk capacity on an unmetered basis that is, one rate for each connection for the entire year, rather than a minute-by-minute rate. The OLOs are then able to resell this capacity to ISPs, who are in turn then able to offer their users a true flat-rate based on fixed costs at source and freed from the uncapped financial risk associated with metered-based offerings. ®

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