AltaVista exposes loophole

The former e-commerce adviser to Downing Street has attacked the regulatory system surrounding internet companies, following AltaVista's decision to pull the plug on its free internet access offer.

The former e-commerce adviser to Downing Street has attacked the regulatory system surrounding internet companies, following AltaVista's decision to pull the plug on its free internet access offer.

Professor Jim Norton, now head of e-commerce at the Institute of Directors, said that it is "clearly unsatisfactory" that the Government's watchdogs don't have any power over firms such as AltaVista.

"There should be some body that takes responsibility for the sector. The Office of Fair Trading (OFT), supported by [the telecoms regulator] Oftel, should take that role," said Professor Norton.

A loophole in the legislation allows internet service providers such as AltaVista to escape the full gaze of Oftel. This is because AltaVista does not own a telecoms network. Instead, it hoped to offer its free internet access service by purchasing wholesale internet air time from BT.

However, internet service providers - such as Demon Internet, which is owned by telecoms firm, Thus - are subject to Oftel's scrutiny as they own a network as well as providing the access service.

Last week AltaVista managing director Andy Mitchell took full responsibility for the debacle - which let down 274,000 people who had signed up for the service - by resigning.

But the customers' chances of any kind of redress are limited. The OFT is advising disgruntled customers to com- plain to Oftel, which in turn claims it has no power over AltaVista. "We just can't regulate AltaVista," insists an Oftel spokeswoman.

Even the Advertising Standards Authority claims it can't take action against AltaVista as the internet company promoted its free offer via editorial press and television coverage, rather than using adverts.

The DTI said the Government is unable to give any watchdog the power to regulate companies such as AltaVista. "Because of an EU directive, we are not allowed to over-regulate or demand licences from internet service providers such as AltaVista. At the end of the day, AltaVista's customers will vote with their feet," said a spokesman.

When AltaVista withdrew its service two weeks ago it initially blamed BT's charging structure for the move. However, this week BT said that the Government's regulators should have clamped down on AltaVista.

A BT spokeswoman commented: "We take seriously the protection of the consumer. BT is disappointed that the organisations set up to act in the interests of consumers feel that AltaVista is outside their remits."