BSkyB has revealed a free broadband offer for Sky Digital customers. Subsidizing the offer is expected to cost Sky £400m (E579m). The broadcaster is offering three Sky Broadband packages as part of its move into the broadband market.

Base is the free option, providing a 2Mb speed service and monthly usage of 2Gb to Sky customers for no extra monthly fee. For £5 a month, Sky Broadbands Mid package offers 8Mb speed and 40Gb monthly usage, while the Max offering gives customers 16Mb and unlimited monthly usage for £10 a month. Base subscribers will have to pay a one-off £40 connection fee and £50 for home installation. For Mid customers the connection fee is £20, while Max subscribers get connection and home installation for free.

Subscribers to all three Sky Broadband packages will have to sign up for a £5 monthly payment to Sky Talk, which requires BT line rental but offers unlimited UK landline calls. Sky Digital customers outside the current reach of the Sky Broadband network will be offered the Connect package, which provides the equivalent to the Mid offering but for £17 a month.

For a lot of incumbent players who have been charging a lot (of money) for not a lot, it could be very uncomfortable, said James Murdoch, BSkyBs chief executive. The satellite group is building on the broadband network it bought last year when it acquired EasyNet for £211m. The bulk of the initial investment will include customer acquisition costs. BSkyB said the broadband product was expected to begin reaping profits in the year to June 30, 2010.

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