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Broadband operator Be bought by O2

Another 'free' broadband deal on the way?

O2 became the third UK mobile operator in the last month to branch out into fixed-line broadband services, with an announcement today that it has bought broadband operator Be.

Be expects to make its broadband network available to about half of the UK population by the end of this year and 70 percent of the population by the end of next year. The deal values the company at £50m.

O2 didn't reveal specific details of the broadband offering it plans to make in the UK but it will meet with some stiff competition. Orange recently unveiled a service in the UK that offers free broadband connections to mobile subscribers on service plans that cost £30 or more per month.

Carphone Warehouse also offers free broadband to subscribers of its fixed-line telephone service. Mobile operator Vodafone recently said it plans to bundle broadband with its wireless service across its markets.

O2, purchased by Spain's Telefonica late last year, already offers bundled wireless and broadband services in Germany, the Czech Republic and the Isle of Man.

Analysts at Rethink say operators are likely to follow Orange's lead. In a research note regarding the Orange announcement, Rethink wrote that it expects Deutsche Telecom to also offer a bundle that includes free broadband for the price of a wireless subscription and NTL, which recently bought Virgin Mobile, to make a similar type of offer.

The trends toward bundles and free broadband also indicate that broadband operators are increasingly unlikely to be able to survive independently, Rethink said.


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