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Carrier WiFi

Sky's Free Broadband Play

Rupert Murdoch's Sky has upped the stakes in the U.K. broadband battle by spending $250 million on a free package that offers a WiFi router, VOIP, and broadband to existing subscribers.

The company is also in talks with Time Warner Inc. (NYSE: TWX) to acquire AOL U.K., the firm confirmed at a London press conference on Tuesday. The fate of AOL's European operations has been a matter of widespread speculation for several months now.

Sky plans to launch its broadband services in August. The free service offers data transfer speeds up to 2 Mbit/s and a 2 Gbit/s download allowance. The mid-range service is priced at £5 ($9.14) per month, and offers speeds of to up 8 Mbit/s and 40 Gbytes of usage. The "Max" service costs £10 ($18.28) a month and offers download speeds of up to 16 Mbit/s, unlimited downloads and free installation.

Sky's satellite network currently covers 28 percent of Brit households. The firm has said that it hopes to reach 70 percent of UK dwellings by the end of 2007.

The £400 million ($250 million) program is one of the biggest salvos fired in the ongoing "free broadband" battle in the U.K. Mobile phone heavyweights Carphone Warehouse Group plc (London: CPW) and Orange UK have already both launched similar services.

Meanwhile BT Group plc (NYSE: BT; London: BTA) has its own "Total Broadband" service, which offers users free calls in the evenings and on weekends. Mobile operator Telefónica Europe plc (O2) is also planning to horn in on the action with its £50 million acquisition of broadband firm Be.

— Dan Jones, Site Editor, Unstrung

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