02 to challenge BT in landline market

Mobile phone giant O2 is going full-circle to challenge former owner BT in the £9billion-a-year landline market.

Britain's biggest mobile network, now owned by Spanish company Telefonica, will bundle home phone calls with broadband packages from £17 a month.

The move comes just over eight years after BT sold its mobile business, which was then called Cellnet.

The timing could hardly be worse for BT, which has been struggling to carve out a new business model after missing out on the mobile explosion.

O2 says it will undercut a similar phone and broadband package from BT by around £12 a month. O2 has connected around 530,000 broadband customers since launching its service in 2007 and performed well in customer surveys.

It checks customers do not pay for download speeds they cannot receive - a common complaint from customers with other broadband providers. It is not just BT that will feel the heat.

Virgin, Carphone Warehouse, Sky and Orange are all trying to persuade customers to buy their phone, internet and TV services from one place. Sally Cowdry, O2's marketing director, said: "Customers will value the convenience of paying for their home phone and broadband together, with no hidden charges."

A bt spokesman said: "We take any new rival seriously."

Source: The Mirror, 16th January 2010

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