The independent mobile phone retailer said it would offer its TalkTalk customers unlimited broadband, voice calls to landlines in the UK and 28 European countries for 9.99 pounds (.44) and month plus a monthly line rental charge of 10.99 pounds and a one-off connection fee of 29.99 pounds.
It said investment in the broadband push would result in an operating loss of around 50 million in the year to March 2007.
''Our free broadband proposition, announced today, will require significant levels of investment in the short term. However, the broadband market is growing rapidly and we are well placed to become a major force within it,'' said Chief Executive Officer Charles Dunstone in a statement.
With a growing suite of telecoms services Carphone has become a formidable force in the UK's fixed-line phone market, and announced in November its intention to target the market for high-speed Web connections.
Carphone hopes to quickly gain a critical mass of customers and mount a serious challenge to market leader BT Group Plc and other rivals such as recently merged NTL Telewest.
TalkTalk has a UK customer base of around 2.6 million following the acquisitions of Onetel and Tele2.
The company, which also announced fourth-quarter trading figures, said its key subscription connections rose 22.4 percent to 890,000 while other connections were up 32.8 percent to 2.23 million.
Last week, Carphone launched with Virgin Mobile a mobile virtual network operator (MVNO) in France. The company said the venture was expected to incur a loss of approximately 10 million pounds in the year.
REUTERS CS GC1518