The Cloud has announced a flat-rate service that will provide unlimited wireless access for just £12 per month.

However, the 'unlimited' service does come with a hitch – a 1GB per month data limit and a 12-month contract. If you don't want to sign up for a year, you can pay the £12 for a single week's surfing – again, with the 1GB limit.

Despite the limit, The Cloud's service is a welcome move, in an area that is about due for real competition. Most providers charge a crippling £5 per hour; many charge more.

Freedom2surf claimed to be starting a price war last year by undercutting BT on its own Openzone network, but Freedom2surf's prices still start at £4.50 per hour, compared with £6 per hour at BT – exactly where they were last February.

The main reason for the stagnation in the market may be that there is little price elasticity. Cutting the cost alone doesn't boost usage, as The Cloud's founder, George Polk, told PC Advisor's sister title Techworld two years ago – hence the move to make things simpler and do away with pay-per-hour vouchers.

Users of the Vonage VoIP (voice over IP) service already get flat rate usage of Cloud hotspots, for voice calls only, included in their monthly £8 fee, according to a deal announced earlier this year.

This story first appeared on Techworld.com.