BT cuts cost of high-speed internet access to £9.95

BT will today launch the latest blow in the battle to sign up millions of households to internet broadband access, with an overhaul of its online package. The former state-owned telecoms monopoly plans to urge customers to avoid cut-price broadband deals from rivals in favour of its own packaged products.

Ian Livingstone, the chief executive officer of BT Retail, said that, while the company's new deals were cheaper than its previous offers, its Total Broadband initiative was not an attempt to counter Carphone Warehouse's launch of free broadband through its TalkTalk arm earlier this year.

"We announced that we would be launching these type of services at Christmas, well before TalkTalk began offering its supposedly free service," Mr Livingstone said.

BT's cheapest broadband service, Total Option 1, will now cost £9.95 a month for six months, rising to £17.99 thereafter, with customers tied into an 18-month contract. However, BT hopes most customers will sign up for Option 2 or Option 3, its wireless internet deals. Customers with either deal will be given the BT Home Hub, a device modelled on Apple's iPod that will eventually offer access to a wide range of services including interactive television.

Option 2 and Option 3 respectively cost £14.99 a month for three months rising to £22.99 thereafter, and £22.99 a month for three months, rising to £26.99 thereafter. Both require customers to sign up for 12 months.

Customers will need a phone line through which broadband can be routed, at a cost of £11 a month from BT. The full cost of BT's Total Option 3 will therefore be about £34 a month, compared with £21 a month from TalkTalk.

However, BT said it was pitching its services at customers looking for more than basic broadband. Mr Livingstone claimed the extra facilities available through BT, such as high-definition sound, free virus protection, access to its Vision and Fusion services, and a video phone, were worth about £370 in the first year.

Chris Williams, an independent broadband provider at the price comparison service uSwitch, said the BT package was an attempt to pre-empt an expected launch from Sky later this year, as well as to take on TalkTalk. He said: "The pricing is expensive."