BT kicks off new price war on high-speed Net access

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BT Stepped up its broadband campaign yesterday by launching a cheaper high-speed internet service aimed at those customers upgrading from narrowband for the first time.

Its so-called Broadband Basic package will cost £19.99 a month although users will also be charged a one-off fee of £80 to cover set-up costs and the price of the modem.

The company, which is targeting new areas such as broadband as it faces increased competition in its traditional market of telephone voice calls, wants to achieve a target of 5 million broadband users by 2006. It now has just more than 2 million broadband users, with half of these accessing the internet through other providers such as Freeserve.

Duncan Ingram, the managing director of BT Openworld, said: "BT Broadband Basic is just the first initiative in our future broadband strategy. In the coming weeks we will be announcing a whole host of portfolio developments and enhancements which will be key in helping BT hit its 5 million connections target during 2006." BT will announce a raft of new measures in broadband on 11 March when it will also give an update on how it has progressed so far. The Broadband Basic package runs at a speed of up to 512 kilobits per second - or about 10 times faster than a standard dial-up connection. Users will be restricted, however, in how much they can use the service.

"The Basic package provides a simple-to-use, low-cost entry level service but with the equivalent speed of our other broadband products," Mr Ingram said. "Now for just a few pounds more than a dial-up service, customers can enjoy the benefits of surfing and e-mail at 10 times the speed whilst freeing up their phone line to make and receive calls."

The Italian service provider Tiscali hit back at BT's move yesterday, pointing out that its own service did not contain any hidden set-up or equipment charges. Steve Horley, Tiscali's general manager access and voice, said: "We're glad BT realises that people want cheaper broadband. But you still pay £20 less a year with Tiscali for 512kbps and no download cap."

Separately, the cable company Telewest yesterday announced it was launching a 256kbps internet access service in the spring for £17.99 a month.

Chad Raube, the director of internet services at Telewest Broadband, said: "We're expecting demand from people who have previously considered broadband a big leap from dial-up and now getting on to the first rung of the broadband ladder will become a no-brainer."

The first 5,000 people signing up to the Telewest service through the pre-registration site will be offered free installation and their first month free.