Wanadoo fires latest shot in UK broadband wars

UK's broadband price wars took a new twist as Wanadoo launched a 1-megabit service for #17.99 a month, undercutting its rivals.

Britain's broadband price wars took a new twist on Tuesday as Internet service provider Wanadoo launched a 1-megabit service for £17.99 ($32.68) per month, steeply undercutting its rivals.

Locked in a battle for market share, Britain's ISPs have been aggressively discounting subscription fees -- and now boosting connection speeds -- to entice would-be customers.

Wanadoo, a unit of France Telecom, has been playing a game of catch-up against dominant fixed-line telecom service provider BT Group and cable companies Telewest and NTL by offering broadband subscriptions for less than £20 a month.

At 1 megabit per second, Wanadoo is offering broadband that's twice as fast as the conventional 512 kilobits per second. BT's 1-megabit service is priced at £29.99 per month.

It's not the fastest in the UK; Cable & Wireless's Bulldog Communications offers up to 4 megabits per second.

Once considered a laggard country, Britain is now one of the fastest-growing broadband markets in Western Europe.

But analysts have begun to question the way British ISPs have expanded into the market, noting that steep discounting is eroding the high average revenue per user (ARPU) normally associated with broadband services.

Broadband is crucial to attempts by telecom firms to offset falling revenue in their core fixed-line activities.