THE satellite broadcaster BSkyB sparked a new flare-up in the broadband price war last week when it waded into the market with a “free” package for Sky TV customers.

The firm — 38% owned by News Corporation, parent company of The Sunday Times — is offering existing customers three broadband options, including a deal with no monthly fee and a one-off connection charge of £40.

People who don’t have Sky TV can also sign up to its Connect deal, which costs £17 a month, plus the £40 connection fee. But rivals such as BT and Carphone Warehouse’s Talk Talk, which was recently the subject of an Advertising Standard Authority (ASA) investigation into its claims to offer free broadband, have been quick to react.

Talk Talk dropped its £30 connection fee (but began charging £29.99 for its broadband modem), while BT stressed that Sky broadband will only be available to 28% of the population when it goes live next month. BSkyB claims it will be available to half the homes in Britain by Christmas.

John Petter, chief operating officer of BT Retail, said: “Only a small proportion of customers will be able to take advantage of Sky broadband straight away. It has very limited coverage in Scotland, and none in Wales or Northern Ireland.”

About 12m Britons already have broadband, and it is estimated that 70,000 are signing up every week. Competition has driven down prices in recent months, but many people feel overwhelmed by the huge choice of deals. Providers are also keen to tie people in for as long as possible, with some of the cheapest deals involving an 18-month contract.

Paula Chadbourne, a 42-year-old part-time teacher’s assistant, recently switched her home telephone from BT to Talk Talk. She was not able to switch her broadband, though, because she is tied in for another 12 months.

Chadbourne, who lives in Broadstone in Dorset with her husband, John, 40, and their children, Laura, six, and four-year-old twins Nicholas and Rebecca, said: “I am a relative newcomer to the internet, but I use it to source local organic produce. We have BT Option 1 at the moment, but I will look round for a cheaper deal when our contract comes to an end.

“I think a six-month contract would be a better deal, but I understand why companies want people to sign up long-term and I am happy with the service we get from BT.”

The Sky Base package, designed for those who use the internet to shop and send and receive e-mails, is the most similar of its offerings to BT Option 1, although the connection is slower. It is free to Sky customers, but there is a £50 charge on top of the £40 connection fee for those who want their broadband professionally installed. Unlimited calls to domestic landlines cost another £5 a month, plus line rental.

Tim Wolfenden of Uswitch, a comparison website, said: “Sky’s free broadband offer could shake up the market because it has 4m customers who are going to be able to ask, ‘Why should I carry on paying for my internet connection?’” However, Karen Darby, chief executive of rival switching website Simplyswitch, is less impressed.

She said: “The broadband offer from Sky is reasonably priced, but it is available only to Sky TV subscribers, with those not signed up having to pay £15 a month for the most basic television package. Those who do not want TV should take a look at some of the many competitively priced alternatives.”

BT Total Option 1 offers a broadband connection of up to 8Mb, with a 2 gigabyte monthly usage cap. It costs £9.95 a month for six months, rising to £17.99 thereafter, with customers tied into an 18-month contract. The company is, however, hoping most customers will sign up for Option 2 or Option 3, its 12-month wireless deals (details of which are given below).