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By Lisa Burroughes, 11 August 2000 00:30

NEWS BT is facing a £37m lawsuit over allegations it has failed to deliver on a contract for wholesale unmetered internet access. UK ISP Zone Corporation claims it had been planning to launch a free-phone internet access service in June based on a fixed rate contract for ports on BT's network. However, just days before the service was due to go live, the company was told by BT that it would be charged by the minute as well. Despite a number of meetings with BT, Denis Cawley, Zone's managing director, claims he has been forced to file a lawsuit to claim back investment in advertising and lost revenues. "Our legal people have checked our case and we are going ahead with the lawsuit, despite bullying tactics from BT." The UK telco denies that any unmetered contract terms were agreed to and the company "strongly refutes" the claim that Zone could have lost £37m in business. A source close to the situation told silicon.com that the contract is unlikely to stand up to close scrutiny. But, the incident has come at a time when critical discussions between the ISP industry and BT for wholesale unmetered internet access - through the Friaco deal - are looking shaky. Kieth Ajagun, general manager for recently launched ISP Freechariot, has accused BT of deliberately creating a market to confuse consumers. "We want BT to just set a flat rate price, but BT wants to keep the confusion in the market because they don't want their customers to move away from them." Ajagun also dismissed BT's claims that it needs to charge ISPs for connection between the local exchange and the switch on a metered basis, in its Friaco hybrid. "BT can't keep saying there are all these variants - they must come up with a price - after all if they can't after 40 years then who else can?" Jeremy Stokes, managing director for World Online, believes BT should offer a two tier pricing structure for Friaco on an unmetered basis. This, he said, would make free internet access a "commercial viability". "We're working towards a solution and reviewing our pricing policy on the basis that there is a realistic chance that Friaco will be on the table eventually," Stokes said.