While the prices are new, the technology is not - Highway uses ISDN, which has been available since the late 1980s.

With ISDN you get effectively two telephone lines. They each can be connected to the Internet at the rate of 64Kbps or combined together for extra speed (at double the call cost).

The fastest modems working on ordinary telephone lines have a theoretical maximum speed of 56Kpbs, but usually work more slowly.

Nonetheless, "for many internet users, there may be little difference," says Iain Stephenson of the Ovum consultancy.

BT has announced several pricing schemes for its services, which will be available in mid-September.

The basic Home Highway package will cost home users £175 for installation, between £49 and £99 for a choice of ISDN adapters (used instead of modems) plus £27 per month and the price of any calls.

BT is aiming the service at Internet users at home who are considering installing a second line. Home Highway costs the same as a second line to install, but its monthly line rental costs twice as much as two analogue lines.

BT move 'too late'

But BT's move is "too little too late" says Ovum's Kate Hewitt.

Iain Stevenson adds that BT could have had "an enormous number" of ISDN users like Germany has, but chose to charge high prices and sell to business users instead.

Deutsche Telekom started promoting ISDN to homes and business in 1995 and it is now used by nearly one in five phone users.

The company charges about the same for ISDN as it does for two analogue telephone lines and charges less for ISDN calls than analogue ones.

BT boasts it has been signing up 8,000 new ISDN users each week - the German figure is more than six times higher.

Other technologies on the way

ISDN is in danger of being overtaken by other technologies offering much higher speeds.

"I think it will struggle because we plan to offer a faster service at a lower price," says Kevin Gooding of Cable and Wireless Communications.

CWC plans to offer Internet access at between 2Mbps and 10Mbps next year, through cable alongside its digital television service.

Unlike the BT's Highway scheme, CWC will not charge users for the amount of time they are online, though the company has not yet announced its monthly charge for cable modem access.

In July a British company, Pace Micro Technology, said it had received an order from CWC to make 100,000 digital cable set-top boxes over 18 months.