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BT does battle with AOL over broadband

Competition in broadband internet services intensified yesterday with AOL and BT Group trading blows over high speed online services.

AOL unveiled a new pricing tariff offering broadband access costing £19.99 a month for 256kbps with a free modem and installation.

BT countered with its own offer of free modem and installation - normally £80 - for its entry-level broadband service which also costs £19.99 a month but offers 512kbps. BT imposes a limit to the total amount of data customers can download each month, however, of 1 gigabyte. AOL has no such capacity limits.

The BT offer starts today and will run until 20 July. It is in addition to BT's existing offer of free flights to the US and Europe for all new consumer broadband customers. However, AOL stepped up the pressure in the premium broadband market as well. It has cut the price of its Broadband Platinum service that offers the much faster 1mbps speed from £34.99 a month to £29.99. The equivalent BT service costs between £38 and £40.99 a month.

The rival offers came as the House of Commons Trade and Industry Committee published responses from the Government and Ofcom to a report into the UK broadband market it published in February.

The responses confirmed that the Government's and Ofcom's determination to see greater competition in the provision of broadband and an expansion of its take-up among businesses and consumers.

Ofcom has already published various proposals to encourage broadband competition and make it more cost effective for rivals to access the necessary network infrastructure run by BT Wholesale.