Mobile phone company O2 yesterday unveiled a move into the broadband market with the £50 million acquisition of Be.
The company, itself taken over earlier this year by Spanish telecoms giant Telefonica, will gain all of Be's existing broadband network plus its customer base.
Be is a privately-owned company founded in 2004. It is currently building a national broadband network which has rolled out to 150 local exchanges, with a planned expansion to 400 exchanges by the end of 2006. The acquisition gives O2 - which demerged from its former parent company BT in 2001 - a starting point from which to develop "converged" services which integrate mobile phone and internet technology.
An O2 spokesman said customers would first be offered broadband for home computers.
The company may then expand into phone calls over the internet - known as voice over internet protocol (VoIP).
Be's broadband network will provide coverage to 50 per cent of the UK population by the end of this year. Further planned expansion will extend that coverage to 70 per cent by the end of 2007.
However, Simon Gordon, O2's head of media relations, ruled out a move into traditional fixed line phones, saying: "I think the converged sector is the way forward and certainly with the weight of Telefonica behind us we can draw on a lot of strength and experience in that field.
"I believe there's a move more towards mobile phone and broadband than the fixed line telephone because the next generation don't own a telephone - they own a mobile phone and a PC."
The announcement comes as BT revealed its latest broadband package, which combines free high definition VoIP calls, free video calls, 8Mb download speeds and more.
Called BT Total Broadband, the service functions via a "home hub" which can connect up to 15 devices.
John Petter, chief operating officer for BT's consumer division, said the company wanted to be at the forefront of the move towards internet phone calls.
"BT believes in VoIP as being the future of telephony. This is proof of our commitment to that," he said.
"Far from trying to resist the change, we are trying to lead it because the change is going to happen anyway. That change is the move towards VoIP from regular phone calls over landlines."
A proportion of phone users will stay loyal to landlines rather than internet, Mr Petter added.