Flat rate internet access has been a dream of many internet users in Ireland. Basically it would allow unlimited access to the ISP for a single subscription payment to the phone company. In this case the phone company would be Telecom Eireann. For ISPs this could be tricky as it would mean that the usage models with their carefully calculated modem to user ratios would have to be thrown out. For the users it could be Heaven but for ISPs it could be the gates of Hell but TE has opted for Limbo.
The Minister for Public Enterprise, Mary O'Rourke, commented on RTE news recently that the proposal for a flat rate internet access had been treated favourably by the European Commission. She went on to say that it may be possible for Telecom Eireann to implement such a scheme by December 1st. However Telecom Eireann has announced that it will introduce its own version of "Flat Rate" access in January 1999. Not surprisingly TE's definition differs from reality in that it appears to be a prepaid block of hours that can be used for internet access rather than the accepted use of the term "Flat Rate".
The main area of concern is that the flat rate can be applied to data telephony rather than to voice and data telephony. The Minister's enthusiasm for the flat rate does not seem to be shared by ISPs. They realise only too well that a flat rate access scheme would require more modems, more phonelines and more bandwidth. Despite what some would claim, ISPs are not making huge profits from offering access. The profits come from the ancillary products such as web hosting, web editing and leased line service.
The idea that flat rate internet access has been the driving force behind the internet boom in the USA is misguided. A lot of other factors, such as the greater per capita ownership of computers, have had more influence. The most important factor is the competition in the US telephony market. In Ireland that competition should start on December 1st.
There is a terrible irony about the whole flat rate internet access situation. Most ISPs in Ireland have a local call rate POP in each area. This means that a call to a POP is a local call rate. Of course the one thing that Telecom Eireann did away with a few years ago was the unlimited local call. It was possible to stay on a local call, regardless of call duration, then for the price of a single unit. At the time that Telecom Eireann changed the charging model, the Bulletin Board System (BBS) scene was vibrant and the internet was about to take off. If one thing had to be selected as a major cause of the poor uptake of the internet it is the group of people who decided to implement a timed local call. These narrow-minded characters very nearly killed the early growth of the internet in Ireland.
A return to an untimed local call model is unlikely. The telephone companies are in business to make money. An untimed local call model would not seem commercially viable. At worst, it would result in someone logging in on the first day of the month and staying connected all month - all for the price of a single call.
At the moment, two basic models seem to be under consideration: Subscription Based Flat Rate Access and Internet as a Value Added Service. A third model, a further reduction in call charges for internet services is also a possibility.
Subscription Based Flat Rate Access
The alternative is a subscription based model. The user would pay the telephone company a subscription fee each month, possibly in the £30 to £40 region. But what is meant by flat rate access is that the user pays a subscription each month and in return gets unlimited access via a specified number. Some of the comments in the Irish newsgroups suggest that a fee of £25 or so per month would be acceptable to many. The problem with TE's version is that it is not strictly a Flat Rate access model.
Analysing the situation from the telco's point of view paints a stark picture. If someone was to stay online continuously for a month with the current charging model it would roughly cost £425. Naturally the ISPs would not like tying up a modem continually. But a flat rate subscription would generate less than a tenth of this revenue for the telco.
When contacted, Telecom Eireann would not comment on the eventual model. They stated that they are examining a number of possible models. One of these models could be the integration of the phone charge with the internet access fee. Esat Telecom however seemed more eager to comment.
Internet As A Value Added Service
Following deregulation on December first, Esat Telecom will have its own ISP. This ISP will be geared towards the domestic user and will be separate from EsatNet, the business ISP. When a subscriber signs up for a domestic phone line with Esat Telecom, they will be able to avail of a per minute ISP service. British Telecom have introduced a such a scheme for domestic users in the UK. The cost of the service there is the local call cost plus a penny per minute for internet access.
The cost details of the Esat Telecom scheme were not available but it is believed that there will be some internet service sign-up fee involved. The most likely response from Telecom Eireann would be to make the same kind of access available for subscribers to the TE subsidiary companies, TInet and Indigo. The complex part of implementing an Value Added Service like this would be making the same option available to subscribers to IOL and the smaller ISPs such as Club Internet and ANU.
Would Flat Rate Suit The ISPs?
The increased demand on ISP's limited resources would result in more engaged tones in the short term. The ISPs would be forced to provide more lines and more modems. In some senses, this may be a good thing for the subscriber but the fundamental aspect is the cost of bandwidth to the ISP. ISPs in Ireland have, until recently, had to cope with usurious bandwidth charges.
Each ISP has a users per modem ratio. The lower this ratio the better. A few years ago in the USA it was ten users per modem. Their whole charging model is based on the fact that not all users are going to be online at the same time. The incentive for users to stay online for many hours at a time has been dampened by the call charges. That coupled with the "download and read" nature of the WWW allowed Irish ISPs to cope with higher user:modem ratios. Flat rate access would largely remove this restraint.
The worst case scenario would be a situation similar to when AOL went for a flat rate access fee a while ago. Previously they had been charging for access on a per minute basis. They were swamped - users logged on and stayed on. Admittedly the phone charges are cheaper and played a major part in this.
Technically speaking, flat rate access would allow a subscriber to stay on line continually for the payment of the flat rate fee and the ISP subscription. The whole idea of leased line service would be in limbo. After all why would a business want to pay over £600 a month for a 64K leased line when an ISDN connection with flat rate could give them access for about £150 a month?
If true Flat Rate access is introduced, the first thing that will happen is that the ISPs will have to amend their Acceptable Use Policy to prevent subscribers from hogging or camping on lines. The second thing will be to add more lines.
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