BT has frustrated internet service providers (ISPs) by announcing its intention to introduce a cheap pay-as-you-go internet access service which will undercut traditional providers and challenge them for first-time users.
The service, which is being prepared for trial in Northern Ireland this month, will offer direct access to the internet without a pre-paid subscription and will cost 1p per minute plus the cost of the phone call. It is due to roll out nationally in September.
John Swingewood, director of BT's internet and multimedia services, commented: 'This is an idea whose time has come. We believe it will grow the market enormously. It marks the first step towards internet access for everyone.'
A BT representative added that it would be a low-cost, entry-level option but denied that the provision of such a service was an attempt to replace ISPs.
However, there are concerns that BT would use the entry-level offering to hook first-time users and then migrate them to its own internet provider, BT Online.
There were also concerns as to whether it would be the best way to draw in users. Maggie Gallant, director of communications at AOL, responded: 'We're quite surprised by the move. In our experience, customers prefer a single monthly payment.
'Most new users want content and ease of use, but also support when they go out onto the internet. Cost is not the prohibitor.'
Adam Daum, analyst at Inteco, commented: 'I can see why ISPs would be very upset. It appears to undercut them on price and at first sight it looks like BT exploiting its market dominance.'
He added: 'ISPs have done a very bad job in expanding the internet market.
Half of the people at home with the ability to access the internet are not actually using it. This kind of service will expand the market by letting people get a taste of the internet without subscribing to an ISP.'
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