Faster broadband price war looms

Many UK web users could soon be able to get a 1Mbps broadband connection for £30 a month or less.

Several internet service providers are gearing up to offer 1Mbps ADSL for little more than other ISPs are currently charging for a 512Kbps link.

Both Freedom2Surf and Pipex are planning to shatter the £30 per month barrier with their forthcoming faster broadband products, and several of their rivals are expected to follow suit.

This follows BT's decision, confirmed last week, to make a wholesale consumer 1Mbps ADSL product available this autumn. This product, called IPStream Home1000, will be resold by ISPs to individual customers.

UK ISP Freedom2Surf is one of several ISPs that already offer a 1Mbps broadband package to consumers, based on another, more expensive, wholesale BT product. Freedom2Surf announced on Thursday that the introduction of IPStream Home1000 will enable it to cut the cost of its 1Mbps Power User broadband package to £29.99 excluding VAT per month, or £35 per month including VAT.

This price cut will take effect as of 6 October, the day the trial of IPStream Home1000 begins.

Chris Panayis, managing director of Freedom2Surf, said in a statement: "Freedom2Surf is committed to lowering the price of ADSL services to a sustainable and more affordable level for our customers. That is why we have moved quickly to take advantage of this new package from BT Wholesale, to make ultra-fast ADSL even more affordable."

Although most UK ISPs are expected to take part in the trial, Freedom2Surf is thought to be the first to confirm its pricing plans.

Pipex, which offers 512Kbps ADSL for £23.44 (including VAT), is understood to be planning to offer the 1Mbps product for around £29 per month.

That would put Pipex, like Freedom2Surf, in a strong position against more well-known competitors such as BT. Its new broadband product, BT Yahoo Broadband, will cost £30 including VAT per month for a 512Kbps connection.

Other ISPs are likely to announce their prices in the next few weeks, before the trial begins.

Plusnet, for example, is currently accepting pre-registrations of interest in the 1Mbps trial from its existing customers, but hasn't revealed firm details of the services that it will offer.

Peter Jackson, marketing co-ordinator of PlusNet, said: "We're likely to offer a choice of options based on IPStream Home1000, including different hardware bundles."

"Pricing hasn't been set yet, but as usual we'll be highly competitive," Jackson added.

Not all existing ADSL users will be able to upgrade to a 1Mbps connection, though. IPStream Home1000 will only work over 3.5km or less, compared to the 6km of the 512Kbps product, so only around 70 per cent of homes in a broadband-enabled area will be close enough to their local telephone exchange for the faster product to work.

Graeme Wearden writes for ZDNet UK