Broadcaster BSkyB is thought ready to grab a slice of the rapidly growing broadband market through an acquisition worth up to £150 million.
The proposed swoop for telecoms group Easynet signals the start of battle against cable TV rivals NTL and Telewest, as well as making it a direct competitor against the likes of BT, AOL and Wanadoo.
One report yesterday said BSkyB had been talking to a number of internet service providers, but opted for Easynet because of its investment in local loop unbundling, the process that involves putting equipment into BT exchanges so companies can control the line into the home and offer a range of services.
Easynet has its own equipment in 250 local exchanges - giving it access to 5.8 million UK homes and 850,000 businesses - and plans to invest in a further 100. Many exchanges are in areas where NTL and Telewest have customer strongholds, such as Birmingham and the Black Country.
The two cable companies, who recently announced plans to merge, already offer a "triple-play" of pay-TV, broadband internet and telephony.
BSkyB is keen to grab a slice of the broadband market, with an estimated 50,000 UK consumers taking high-speed internet each week.
The company, which has almost eight million Sky subscribers, is also likely to use the broadband service to support its move into video-on-demand.
Speculation was fuelled by last week's BSkyB announcement that it planned to raise £1 billion from a bond issue, with some of the proceeds possibly going towards acquisitions.