ISPs huff and puff - but BT could blow their house down

Last week, ISPs reacted angrily to BT's announcement that it plans to launch a pay-as-you-go, ISP-less Internet access service.

BT said the service - dubbed Click - is "designed to grow the Internet marketplace and get many more individuals, families and businesses online". Users of Click will not receive monthly bills, but be charged as little as a penny per minute on top of regular calls.

Sounds good. So why are ISPs so angry about the scheme - and will their ire get them anywhere?

The Internet Service Providers Association (ISPA) has said it is considering calling on telecoms watchdog Oftel to block the launch of the service. ISPA argues that although Click looks like a good way to get more people onto the Net in the short-term, in the long-term it could drive ISPs out of business, and reduce consumer choice.

Click promises Internet access and Web-based email, but no proprietary content or other services. David Kennedy, chief executive of ISPA, told Silicon News: "For enthusiasts already on the Net there is no danger. They know what they get with an ISP. But new users might not realise what they're missing."

ISPs are also worried that BT will carefully monitor Click, and target heavy users with BT Internet, the telco's fully fledged ISP service. That may be possible, but the prospect of BT offering the service as a loss leader to drive ISPs out of business has been dismissed by some observers in the industry. As well as being illegal, they claim it would be foolish for commercial reasons.

"In the long-term, it's not in BT's interest to drive ISPs out of business," said David Brown, chairman of telecoms consultancy Schema. "The more ISPs there are in the market, the more traffic BT has on its networks. I can't see how the ISPA has a case."

In spite of Oftel's traditional reluctance to allow BT to expand into new arenas, the giant telco may well get its way. And the ISPs will have to face up to a new source of competition.