BT's prices are coming down

The lower prices take effect from 1 July and will cut broadband charges for all BT's services except Broadband Basic, which remains at �19.99 a month.

BT had been expected to cut its prices after research showed it was struggling to compete with other providers.

Research from Enders Analysis found it was losing customers to rivals such as Wanadoo and Tiscali.

Cheaper rivals

BT'S NEW PRICES BT Broadband Basic - �19.99 a month, speed 512Kb, max download 1 GB BT Broadband - �24.99, download cap 15GB BT Yahoo! Broadband - �26.99, max download 15GB BT Broadband - �28.99, speed 1Mb, max download 30GB BT Yahoo! Broadband - �29.99, speed 1 MG, max download 30GB

BT's price reduction will be for both new and existing customers, and in addition it will be offering free modems and connection.

"Today's announcement gives customers the best ever value broadband from a name you can trust," said Duncan Ingram, managing director of BT Openworld.

BT plans to win five million broadband customers by the end of 2006.

Tough competition

It also announced that it intends to make broadband available to 99.6% of UK households by August next year.

"BT is getting a bit more aggressive and its ability to sell new technology is key to its future as its traditional fixed line business faces increased competition," said Henk Potts, investment manager at Barclays Private Clients.

BT RIVALS Wanadoo - �17.99 a month, speed 512K, max download 2 GB Tiscali Broadband X3 - �15.99

According to Enders Analysis, BT has been losing market share because rivals have been undercutting it on price.

The company says that up until two years ago BT had 58% of broadband customers in the UK, but this has since fallen to 42%.