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U.K. home Web usage levels off

Two out of five U.K. households are connected to the Internet--but are the sharp rises of recent years vanishing?

By Wendy McAuliffe

The number of British households connecting to the Internet appears to be leveling off for the first time, according to a new study by telecommunications watchdog Oftel.

The United Kingdom experienced a 1 percent drop in the number of homes connected to the Internet this summer, falling from 40 percent in May to 39 percent in August. This is the first time that a dip in British home Internet penetration has been recorded by Oftel since it began monitoring residential consumer behaviour in January 1999.

"The study shows that home Internet usage has remained broadly unchanged--but with a 2 to 4 percent margin of error, the 1 percent difference is minimal," an Oftel representative said. The company said it is too early to speculate whether Britain has reached saturation point for home Internet usage.

Significant drops in Internet penetration were witnessed among specific consumer groups, with all age groups between 25 and 64 experiencing at least a 2 percent decline. Middle-income groups, earning between $25,543 and $43,794 (?17,500 and ?30,000), also registered a dip in home Internet usage from 51 percent in May to 46 percent in August.

The majority of households are using a PC and an ordinary phone line or dial-up to access the Internet at home. Eighty-four percent of connected homes in the country fall into this category, with just 9 percent using BT Highway or another ISDN connection. The Oftel study supports industry estimates that less than 1 percent of the British Internet population are using ADSL, but indicates that three times as many consumers are using cable modems.

"U.K. consumers benefit from some of the cheapest dial-up narrowband Internet access in Europe," the Oftel representative said. "But we are keen for consumers to have a choice about the package that they use--it is our job to ensure that the barriers to entry for service providers are as low as possible and that the environment is competitive."

Unlimited access packages seem to be playing an important role in getting people online, with 40 percent of Internet homes using a fully or partially unlimited package. Around half of U.K. homes with unlimited Internet access have switched from other packages, and a third of Web consumers say they would not have connected to the Internet at all if unlimited packages did not exist.

"Since Friaco came in, operators can go again to BT and get a flat-rate product from them, meaning that service providers can pass an increased certainty in cost onto their consumers," the Oftel representative said. "It remains to be seen whether this trend in (unlimited) will continue to grow." Freeserve has remained the favourite ISP for British customers since August 2000, and now holds 19 percent of the residential Internet market. AOL and BT Internet are also proving successful, holding 16 percent and 15 percent market share, respectively.

Staff writer Wendy McAuliffe reported from London.