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New broadband packages have been unveiled by O2 as it reacts to demand for faster connection speeds at reduced prices.

O2 has revamped its home broadband packages with the introduction of a cut price deal offering download speeds of up 20Mb and unlimited usage and a new package aimed at heavy internet users, as it responds to Virgin Media’s launch of its much-hyped 50Mb service.

Under the terms of the Home Broadband Premium, O2 mobile phone customers pay £9.79 per month, which entitles them to an unlimited usage allowance, download speeds of up to 20Mb and 24/7 UK customer service. Non-O2 mobile customers, meanwhile, pay £14.68 per month for the service. Both prices are adjusted to take into account the recent VAT cut and are likely to revert to £10 and £15 once this temporary government measure is waived.

O2’s other new offering the Home Broadband Pro deal is courting a less casual user and according to the provider is aimed at “heavy consumer internet users and small businesses”. The service’s USP is that it includes O2’s enhanced router which employs new wireless 802.11n technology to deliver improved performance, better coverage and is more reliable than standard routers.

Customers who sign up for the deal get download speeds of up to 20Mb, upload speeds of up to 2.5Mb and unlimited usage. They also benefit from prioritised 24/7 UK-based customer service as well as the option to take a free static IP address, for which there is no extra charge. O2 mobile customers who sign up for the Home Broadband Pro package pay £17.13 per month, while non-O2 customers pay £22.02.

The network is also offering its existing broadband subscriber base the chance to upgrade to either package by signing a new 12-month contract.

O2’s new packages have been unveiled just days after Virgin Media launched its 50Mb service. By offering download speeds of up to 20Mb but a price five times cheaper than Virgin Media’s package, O2’s deals will be attractive to those who need a faster connection and unlimited but may baulk at the £51 per month outlay for the 50Mb service.

Peter Rampling, marketing director at O2, said: “And with the new broadband services providing even better value, speed and service we think both new and existing customers are going to love them even more.”

O2 recently scooped the awards for 'Best for Customer Satisfaction' and 'Fastest Broadband' from Top 10 Broadband.

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