The number of British households connecting to the Internet appears to be levelling off for the first time, according to a new study by telecoms watchdog Oftel. The UK appeared to experience 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 the telecoms watchdog 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," said an Oftel spokesman. Oftel 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 £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. "UK consumers benefit from some of the cheapest dial-up narrowband Internet access in Europe," said the Oftel spokesman. "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." Unmetered packages seem to be playing an important role in getting people online, with 40 percent of Internet homes using a fully or partially unmetered package. Around half of UK homes with unmetered Internet access have switched from a metered package, and a third of consumers who have connected straight to unmetered say they would not have connected to the Internet at all if unmetered 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," said the Oftel spokesman. "It remains to be seen whether this trend in unmetered 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 of customers respectively. See the Internet News Section for full coverage. Have your say instantly, and see what others have said. Click on the TalkBack button and go to the Telecoms forum. Let the editors know what you think in the Mailroom. And read other letters.