Telecommunications watchdog Oftel yesterday ordered BT to cut the price it charges other providers for unmetered internet access services using its telephone lines.

Oftel said it hoped the 8.5% cut would be translated into lower prices for the 4m British households that use unmetered internet access, but industry experts fear BT's struggling rivals will keep the money for themselves.

"To be honest, in terms of the impact on web users the reduction is going to the middle men, not the ISPs [internet service providers] who would pass it on to customers as lower prices," said a senior executive at one ISP yesterday. "The best I think we can hope for is that it will stabilise prices and stop them going up."

Unmetered access, where customers pay a flat rate of about £15 a month for unlimited use, is a stepping stone to broadband services, which offer high speed, always-on access to the web.

BT's rivals can offer ISPs unmetered internet access services over BT's network through a wholesale product named Friaco. Yesterday's 8.5% price cut, slightly more than expected, will cost BT £7m-8m a year.

"Operators have the opportunity to pass these savings on to ISPs and through them to consumers," said Oftel head David Edmonds.

But many of the companies that buy wholesale access from BT - such as WorldCom and Energis - have been hit by a dramatic slowdown in spending on communications by business customers so are likely to hold on to the money saved by the price cut.

"We are disappointed by the cut," said a BT spokesman last night. "But we hope it will be passed on to consumers."