Carphone Warehouse takes wraps off 'free' broadband

You need to sign up for a £20.99-a-month phone package, but the 8Mbps broadband is nominally free

Carphone Warehouse has put an end to speculation on its free broadband product by revealing what it calls "free broadband forever".

For £9.99 a month and an additional £11 line rental, Carphone customers will get free local and national calls within the UK; free landline calls to 28 foreign countries including Australia and the US; as well as up to 8Mbps broadband.

Those signing up to the package will also need to pay a one-off connection charge of £29.99.

Rumours about the promised 'free' service had raised expectations that it would be priced at £4.99 a month initially, rising to £14.99 a month after three months.

The new Carphone offering comes in at roughly the same price as other dual-play services, such as Bulldog's which offers 8Mbps broadband and landline for £20.25, although calls are not free.

According to Ian Fogg, analyst at JupiterResearch, 'free' broadband as part of service bundles could mark the start of a change in the UK broadband market.

"Once one ISP starts to lower prices, it puts tremendous pressure on the others," Fogg said. "For ISPs that just offer broadband, it will become harder to compete with those that can do cross-subsidies."