Karoo, the broadband provider owned by Hull-based KC, is now permitted to offer broadband bundles in the city.
The internet service provider (ISP) will now be able to offer home phone and broadband packages to East Yorkshire residents and businesses after being given the go-ahead by Ofcom.
According to the media regulator, the move should potentially allow customers to access better value communications products.
Karoo will be allowed to offer broadband bundles providing they are available to all premises in the Hull area, that prices are published on its website and are set in a way which does not discourage other ISPs from offering their services in the city.
KC is currently the dominant broadband and home phone provider in Hull, where BT has established no presence.
Earlier this year, Ofcom reported that 50 per cent of UK consumers were paying for a communications bundle consisting of two or more services during the first quarter of 2010, up from 29 per cent in 2005.