"All-You-Can-Eat" ISP model criticised by BT

A representative from British Telecommunications PLC has called the American model of offering unlimited Internet access 'absurd,' saying that Internet service providers will never make any money that way. Speaking at the Convergence '97 conference, Rupert Gavin, director of multimedia services for BT, said that if Americans are given unlimited access, they will 'get online and stay online for entire days at a time.' Ironically, BT's competitors agree - and claim it is loss-leading with its own flat-rate Internet plan. Sound familiar?

A representative from British Telecommunications PLC has called the American model of offering unlimited Internet access "absurd," saying that Internet service providers will never make any money that way.

Speaking at the Convergence '97 conference, Rupert Gavin, director of multimedia services for BT, said that if Americans are given unlimited access, they will "get online and stay online for entire days at a time."

Since most US telecom operators don't charge for local calls, users will connect to the Internet and have little concern about how long they stay on, he said. This will cause the Internet to "bog down." In addition, ISPs and telephone companies won't be able to make any money in offering unlimited access, he said

One company that is suffering already from its recent foray into unlimited online access is America Online Inc., Gavin said.

Gavin, and another speaker, Professor Michael Tracey from the University of Colorado, compared unlimited online access to "an all-you-can-eat restaurant." Gavin said Americans are prone to "sit at the table waiting for the next meal to begin."

BT Internet offers its own unlimited access plan for 11.75 pounds sterling (US$19) per month, but users have to pay local access charges to make the call. Since a large majority of U.K. users use BT for local phone service, BT would profit from the connection on a per minute basis as well - a fact which some competitive ISPs here say enables BT to keep its Internet service afloat.

BT can't possibly be turning a profit by offering Internet access at under 12 pounds a month, says Laurence Blackall, managing director of Global Internet Ltd., an ISP with 15,000 UK-only members. Due to the company's "huge corporate overhead," BT is probably taking a loss on its monthly service costs, Blackall says. However, since BT knows people will be calling the BT Internet services on a BT phone line, they "make money anyway," he says.

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