Broadband service charges by the gigabyte

The Broadband provider PlusNet has become the first to offer a cut-price, low-capacity service that uses BT's new "capacity charging" model to limit the amount of data customers can download for free.

The Broadband provider PlusNet has become the first to offer a cut-price, low-capacity service that uses BT's new "capacity charging" model to limit the amount of data customers can download for free.

Its new Broadband Home service allows customers to download up to one gigabyte (1,000 megabytes) of data for £14.99 per month, but will attract a charge of £1.50 for every extra gigabyte beyond that.

Peter Jackson, PlusNet's marketing coordinator, said: "The average broadband customer typically downloads about four to six gigabytes per month, but for someone starting out it would probably be rather less. But we're offering the choice to customers."

The introduction of "metered data billing" by BT Wholesale, which provides the basic broadband service resold by dozens of internet service providers in the UK, marks a key stage in the development of broadband. Having recently cut the cost of its broadband service, the metering system opens up the possibility of "capped" services in which customers will have to balance price, line speed and total download capacity.

BT and Wanadoo have already launched capped services, but PlusNet undercuts them on price.

More than 3 million people in Britain have broadband accounts, and BT itself aims to have more than 5 million signed up to its own retail service by 2006. It also says it will enable all of its exchanges for broadband by June 2005.

However, PlusNet, which is based in Sheffield but owned by the Nasdaq-listed Insight, said it was still unhappy that BT charges a £58.75 "activation fee" to new broadband customers, and charges £11 to shift an existing broadband user from one provider to another. PlusNet said it would absorb migration costs, but not the activation fee. Mr Jackson said: "The only barrier to full take-up for broadband now is the [costly] activation fee that BT continues to charge all ISPs to get people on to broadband."