Broadband bills are likely to rise after Ofcom, the telecoms regulator, said it was reviewing the amount that BT can charge operators for access to its telecoms services.

Although the watchdog said it might not allow BT to raise prices as much as it would like, the move is likely to mean an increase in the amount that internet service providers such as BSkyB and Carphone Warehouse pay for access to “unbundled” broadband lines.

Three years ago, Ofcom forced BT to open up, or “unbundle”, the local loop – the copper wire connections linking households and businesses to telephone exchanges – reducing the amount it could charge and allowing service providers to put their own equipment in exchanges.

Any rise in costs is likely to hit companies offering “free” broadband the hardest, as their margins rely heavily on savings made by unbundling. Service providers such as Virgin Media would benefit because they do not rely on BT for access.

BT said that the cost of maintaining the lines has gone up alongside greater competition from companies such as BSkyB, 39.1 per cent owned by News International, parent company of The Times. BT said that the ceiling terms set three years ago were “not sustainable indefinitely”.

Analysts at Dresdner Kleinwort estimate an increase in unbundled rental charges could add as much as £100 million a year to BT’s earnings, almost 2 per cent.

Internet service providers also face pressure from the popularity of applications such as the BBC iPlayer and websites such as YouTube, which are straining their networks, forcing them to spend more to add bandwidth capacity.

Analysts believe a combination of these factors will result in higher prices for broadband. Martin Mabbutt, of Nomura, estimates that BT would like to increase its unbundled line charges from £81.69 a year to about £113, but is likely to get only about £2 a month.

He added that price pressures are also likely to bring about more consolidation in the market. Tiscali, the Italian service provider, has already put itself up for sale, with BT, Sky, Vodafone and Carphone Warehouse all believed to have put in bids.

John Davies, telecoms analyst at Dresdner Kleinwort, believes that in future service providers are likely to charge partly for the amount downloaded as well as by the speed of the connection.

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