It follows a statement from the telecoms watchdog about BT's forthcoming 'no frills' broadband service.

Under existing rules and regulations BT will be able to use the familiar blue telephone bill to charge customers for the service.

It will also be able to market the service via this telephone bill although Oftel has restricted BT from using billing information to target particular customers such as heavy internet users.

Competitive advantage

People are shopping around and just because the information is available on one bill doesn't necessary mean that people will choose it

Oftel spokesperson

Freeserve is incensed by the news.

"Oftel has gifted to BT the anti-competitive advantage of using its blue bill to charge for its own broadband service," said the ISP in a statement.

"The blue bill, which supports BT's near-monopoly fixed line phone business, is a privilege of BT and BT alone. This is a clear example of BT being allowed by the regulator to leverage a dominant market position to establish a position in broadband," said Freeserve.

In response, Oftel has said there is already plenty of competition in the market.

"People are shopping around and just because the information is available on one bill doesn't necessary mean that people will choose it," said a spokesperson for the watchdog.

BT Broadband launches in June and offers people an internet connection without the need for an ISP.

It will be a basic service without e-mail or free web space and as such will be slightly cheaper than other broadband services at �27 per month.

BT hopes to attract half a million customers to the service in the next year.

Freeserve has launched its own TV marketing campaign to attract users to its broadband service.

It is also offering discounts on the set-up charge. The service costs �29.99 per month.