AltaVista's free Net offering: all that glisters...

The telecoms industry is suddenly scrambling to give UK consumers low-cost Internet access.

US ISP AltaVista pitched-in first this week with an offer of free 0800 access to the Internet. Consumers will only have to pay a one-off charge of between £30 and £50, and an annual subscription of between £10 and £20.

AltaVista was quickly outdone by NTL, which promised subscription-free access with no call charges, as long as customers spent at least £10 per month with it on other calls. Cable company NTL has the advantage of an existing telecoms infrastructure, and a definitive date for its service - both lacking in the AltaVista offer.

The moves bring to the UK what users in the US take for granted: a monthly or yearly subscription fee combined with no call charges. In the United States, AltaVista runs an entirely free service - no call charges and no annual fee. The service is paid for by surfers having an always-open advertising window on their screens.

Both the NTL and AltaVista services will be cheaper than Freeserve's current offering, and even UK prime minister Tony Blair has expressed support for their announcements. It's New Labour gospel that call charges are crippling ecommerce in Britain by denying it an audience. And with Blair now promising to put everyone online by 2005, the cost cutting needs to start now.

Martin Keogh, European business development manager at AltaVista, said: "We're not claiming to be a free Internet service. The deal is it's completely transparent. You understand entirely what you get, there's no hidden charges. The average user of Freeserve is paying £200 per year in quasi-hidden charges."

James Eibisch, research manager at IDC, believes call charges have not just been holding back the number of people online it's also cut down the amount of time spent online once people are connected, which is just as significant.

"The average metered access usage in the UK is between 15 and 20 minutes a day," he said. "The average in the US is closer to an hour per day. When the time-based charge drops, the usage increases."

The AltaVista and NTL offers sounds tempting - but according to Eibisch and other industry experts, the deals to be had on Internet access are so varied that users need to look around and decide which one best suits their needs.

Peter Gregory, CEO of Totalise, said - perhaps unsurprisingly - that the AltaVista offer is not the best available on the market. His own company pays its customers back by offering shares. He claimed that the average user will make £20 worth of call charges and receive £80 in shares.

But Gregory admitted that the Totalise business model captures a Net-savvy portion of the market, and that most people will look for a straightforward deal of the AltaVista kind.

But he added: "Thirty pounds is still a lot of money to pay before you've even tried the service." He went on to say that users may be unhappy with speed of connection or customer service - issues which have afflicted the pioneers of toll-free Internet access.

UK ISP, Xstream, is also trialling a 24x7 0800 service, but at the moment it's restricting users to two hour session limits. The company's managing director, Paul Myers, said the trick is balancing capacity, and he's not convinced that AltaVista is ready. "The 0800 schemes before have all misjudged capacity. AltaVista is offering little by way of detail."

But in the end, are call charges really keeping UK citizens off the Web? In the United States, the sub-$500 PC is a way of life. The cost of the hardware is still prohibitive in 'rip-off Britain'.

NTL is on to a winner with its plans to launch an Internet TV service in the near future. Only when the cost of all parts of the equation drop will a UK audience for ecommerce take to the Net.