Free net access arrives at last

Ecommerce activity in the UK was given a massive boost this week following AltaVista's decision to make truly free internet access a reality for consumers.

Ecommerce activity in the UK was given a massive boost this week following AltaVista's decision to make truly free Internet access a reality for consumers.

AltaVista will initially offer 500,000 customers unlimited internet access with no phone charges for a set-up fee of about £35 and an annual renewal fee of about £10. The announcement prompted an immediate flurry of activity among rivals, with cable firm NTL the first to announce a similar offering if customers spend £10 a month on conventional telephone calls.

Internet access can cost as much as £126 per year in local call rates through Freeserve, and £198 through AOL, according to researcher Datamonitor. AltaVista claims its new offering will save UK web users £700 million a year.

The decision was hailed as the first step towards removing the final barrier to ecommerce growth in the UK. 'This has significant importance for the UK's online economy,' said Nick Gibson, analyst at Durlacher Research.

"It's a fantastic move," said Herb Kim, UK managing director of auction site QXL.com. "It will be great for ecommerce because people will be willing to browse more.

"It could even increase competition between sites, because users can afford to be online looking for the best deals, whereas before, staying online would kill any savings."

Evan Rudowksi, European managing director of Internet service provider (ISP) Excite, said his company was considering a similar deal. A spokesman for Freeserve, which revolutionised the ISP market, said: "The idea of unmetered access is an obvious move, because telephony charges are still a barrier."

Prime Minister Tony Blair praised AltaVista and NTL for setting an example. "This is good for business and consumers," he said, adding pointedly: "I'm sure that others - including BT - are now ready to break new ground themselves."

BT, however, was less than convinced. A spokesman declined to comment on future pricing policies, but instead questioned whether or not AltaVista could deliver a reliable service. "It is one thing to have the service but another thing for people to get access to it," he said.

AltaVista is initially limiting the number of subscribers to ensure it can cope with demand.

Last month, rival cable firm Telewest also launched an unmetered access offering for £10 per month, but was forced to stop accepting new customers while it upgraded to cope with heavy demand which jammed its exchanges.