Wanadoo fires shot at BT in broadband price war

France Telecom waded into the high-speed internet price war against its arch rival BT Group yesterday when it announced a £17.99 1Mb service through Wanadoo, its internet service provider (ISP).

France Telecom waded into the high-speed internet price war against its arch rival BT Group yesterday when it announced a £17.99 1Mb service through Wanadoo, its internet service provider (ISP).

The aggressive move brought an immediate response from BT, whose 1Mb service costs £29.99 a month. Duncan Ingram, the managing director of BT Openworld, said: "It will be interesting to see whether Wanadoo's is a permanent price or just an initial special offer."

BT's broadband tariffs have been undercut by opposition including Tiscali, which launched a £15.99-a-month basic broadband offer at the slower speed of 512k. That led to BT reducing the price of its equivalent service to £19.99 a month. However, there were no signs yesterday that BT was about to react to Wanadoo's sub-£20-a-month offer on the much faster and content-rich 1Mb service.

BT is planning to use its high-speed broadband service to launch video on demand and other entertainment services later this year. Mr Ingram said: "Of course, there are different propositions at different prices and some will be cheaper than others. But broadband isn't all about speed, it's also about content and value for money and we think BT's offer stands tall here."

Eric Abensur, the chief executive of Wanadoo, said: "We believe 1Mb is a basic right for all internet users, so everyone can enjoy the benefits of faster browsing and downloading, higher quality sound and video, and the enhanced online experience that 1Mb broadband provides."

Competition in the broadband market is set to intensify this autumn as content-rich services are launched by rival ISPs. Easier and cheaper access to BT's backbone network for rival wholesale providers will mean a plethora of ISPs coming on to the market.

Yesterday Telefonica, the Spanish telecoms group, said it had started offering ISPs low-cost access to the BT network using a wholesale product called Datastream, which can offer access to ISPs at prices competing with BT's own wholesale offer.

It said it had signed a deal with V Two One, an ISP with about 60,000 customers, which will now be able to launch what it claimed will be the cheapest "uncapped" broadband connection in the UK. At the moment most high-speed connections limit the amount of data a user can download each month.