Broadband prices in the UK:

Freeserve: �49.99 per month plus �170 installation fee BTopenworld: �39.99 per month plus �150 installation fee

From next month, the France Telecom subsidiary will charge �49.99 per month for its ADSL offering, constituting a �10 rise.

In addition, it will charge �170 for installation, up from �150. This means its customers will pay just under �600 per year for fast internet access, or almost �770 for the first year.

The price hike will disappoint the Labour government, which has hopes to make the UK one of the most competitive broadband markets in the world.

Regulator and BT blamed

Freeserve itself purchases wholesale broadband capacity from the British Telecom subsidiary, BT Ignite.

Broadband users in the UK:

BTopenworld: 27,000 Total via BT network: 50,000 (estimate) Freeserve: Undisclosed (Not including cable customers)

"[The price increase] has been forced upon Freeserve because we have no confidence in BT or the regulator driving down the wholesale price to a level which will facilitate large-scale take-up of broadband in the UK," the internet service provider said in a statement.

Freeserve has called for BT Ignite, which allocates broadband capacity to ISPs, to cut its wholesale prices "to levels seen in France and elsewhere in Europe".

Currently, the wholesale price is �35 per month. Freeserve said the price should be less than half that.

BT has dismissed Freeserve's charge, insisting that it has worked hard and invested heavily to make broadband available for ISPs. The telecoms watchdog Oftel had scrutinised the prices, a BT spokesman said.

"ISPs have to live in the real world where costs have to be met," he added.

Consumer demand?

Freeserve has also expressed doubts about BT's allocation process, which it says "has made it virtually impossible to plan an effective marketing strategy to create consumer demand".

But the BT spokesman insisted that Freeserve is given the same access and charged the same as 149 other ISPs, including its own subsidiary BTopenworld.

"It's for the ISP to add value," the BT spokesman said, insisting that it is a level playing field.

The high cost of broadband access has been blamed for its low penetration in the UK compared with leading EU countries.

About 11.5m people in the UK have access to ADSL broadband via BT telephone lines, whether directly through BTopenworld or via an ISP. But only about 50,000 have bought the service, with 27,000 of them buying the BT offering, a BTopenworld spokesman said.

This compares with about 500,000 users connected by Germany's Deutsche Telekom. Freeserve declined to tell BBC News Online how many broadband customers it has.

Broadband cable

Broadband access via cable has proved as popular as via BT telephone lines, even though cable is much less widespread in the UK.

Telewest and NTL, two of the leading cable companies in the UK, both offer the service as part of their bundled service offerings which may include several phone lines and a range of TV-channels.

NTL has as many broadband customers as BTopenworld.

The retail group Dixons sold Freeserve in December 2000 for �1.65bn to its French rival Wannado, which is part of France Telecom.