Orange today became the latest player to offer "free" broadband services in the UK as its parent company, France Télécom (FT), pushes through a major restructuring of its mobile and internet businesses.

From tomorrow, FT will ditch its Wanadoo online brand and merge its internet service provider business with its Orange mobile unit.

Following the trend towards "converged" bundles of services, the enlarged Orange will offer customers a package of fixed-line, broadband and mobile services in the UK under one brand.

Orange subscribers who spend at least £30 a month on Orange mobile phone contracts will be offered "free internet access plus free calls from fixed-line to Orange mobile phones". The move is likely to increase the already fierce competition in the British internet market.

It comes as large incumbent telecoms groups such as FT and BT move to diversify in the face of heavy pressure on their staple fixed-line revenues.

Competitors including NTL, the cable group, and Vodafone, the mobile telecoms group, are expected to emulate the "free broadband" model later this year as high-speed internet services become commoditised and margins are cut to the bone.

BT, the former state monopoly, and BSkyB - in which The News Corporation, parent company of Times Online, has a 37.2 per cent stake - are also expected to respond with packages that will include internet television services.

Orange will not charge a connection fee, but subscribers to the new "converged" product will have to pay normal line rental charges, typically around £10 a month. A wireless router will also come as part of the deal, which will require customers to sign up for a minimum of 18 months.

The fixed-line portion of the Orange service will use voice over internet protocol (VoIP) technology - which allows voice calls to be made over the web for a fraction of the cost of conventional telecoms services.

Chris Williams, broadband product manager at uSwitch.com, the price-comparison website, said: "Broadband as a stand-alone product is never going to generate significant margins, but coupled with fixed line, mobile or digital TV products it is an extremely powerful tool for attracting a new customer base and driving profitability.

"We are now seeing a whole host of communications companies, from Sky to O2 and Vodafone, either announce plans or signal their intention to enter the broadband market with bundled packages in the near future. We are at the dawn of a new age of bundling for consumers, and this will become the norm for the major telecoms suppliers."

Equant and Etrali, FT's business-to-business arms will also be included under the Orange banner.

Earlier this year Carphone Warehouse fired the first salvo in the UK broadband price war when it unveiled a £21-a-month offering, which includes line rental, unlimited broadband access and free landline calls in the UK and 28 other countries.

In light of the figures, Gartner has increased its mobile phone sales forecast to 960 million units for the year.

"As mobile phone replacements in mature markets such as Western Europe and North America gave little sign of slowing down, strong sales in regions such as Asia/Pacific and Japan contributed to such a positive start in 2006," Carolina Milanesi, principal analyst for mobile terminals research at Gartner, said.

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