Fresh options must address high cost of Internet usage

The flurry of Internet connection options announced in recent weeks means browsers will have more ways to pay for usage, but the big question is whether or not greater competition and choice will bring down costs.

Until now, users had few options beyond their choice of connection: POTS (plain old telephone system); ISDN (high bandwidth connections that allow much faster transmission of data); or some type of leased-line connection, where the customer - generally very large businesses which need to move lots of digital data - pays for very fast connections and heavy usage. At the basic POTS level, users paid Telecom Eireann for the time they were connected to the Internet, just as they would for any personal phone call, albeit at a reduced rate than a regular voice call. ISDN, offered by several Internet service providers (ISPs), is charged at a similar call rate to POTS but the set-up costs are hefty because Telecom must install a special line and the user must purchase a customised modem.

Businesses and the Government have repeatedly argued that Internet connection charges must come down significantly if major growth in usage is to come about. That growth is needed to create a climate in which Internet users will be willing to stay online to browse shops and services, building the foundation of an e-commerce culture.

Likewise, companies need less costly connections before they will use the Internet extensively for inter-business transactions. If Ireland wants to attract the range of businesses focused on telecommunications and e-commerce needed to move the State towards a significant role in global e-commerce, connections must be made much less expensive than they are now. They must approach the comparatively low-cost US and it must be made much easier for companies to obtain large bandwidth connections in the configurations they want.

The primary demand over the past year has been for flat-rate access. The term has caused some confusion because it has a different meaning in the US, where local phone calls are free. Phone users there pay a monthly connection charge and extra charges for long-distance calls or special phone services. In the US, flat-rate Net charges generally mean that Internet users pay their ISP a flat monthly rate - typically about £14 - for unlimited Internet usage. Demand for flat-rate Net access in Ireland is actually a demand for flat-rate Internet phone charges. Ideally, the flat charge would be for unlimited Internet access, or alternatively, for a large enough slice of time that costs for moderate users were significantly lower if they opted for a flat-rate charge rather than paying regular phone rates. Telecom's promise last month to introduce a flat-rate offer in January will definitely not be for unlimited access, the company says, but for a pre-determined chunk of time, yet to be decided. Telecom will have to pitch this service carefully for it to be attractive. Two to four hours of Net use daily quickly pushes costs into the £30-40 per month range, especially if much of that use is during peak hours.

Charges must be around £20 per month for fairly heavy home use for a flat rate to work. The alternative is to stick with straightforward telephone charges, which will be coming down another 33 per cent for Internet connections. It's not yet clear whether these new charges will also apply to ISDN lines.

Esat Telecom's new Net offering - a pay-as-you-go approach with no monthly charge for the actual Internet link (Esat is also an ISP, having acquired EUnet, and thus can tailor such an offer for its customers) - is a good option only if you make minimal use of the Internet - under 30 minutes a day. For checking email a few times a day, and occasionally going on the Web, this might suit an individual or small business. But the service does not address the central issue - lowering costs to encourage people to stay online and use the Net as a daily tool.

Business users who require major bandwidth will have to wait and see how greater competition in the market affects charges for high-speed connections and watch for new players coming into the market.

One thing is sure, though, change has to happen fast and rates need to come down as connectivity options open up. Otherwise, the opportunity for the State to become the European leader in e-commerce will pass to willing competitors.

Karlin Lillington is at klillington@irish-times.ie