The company plans to raise its price from £39.99 a month to £49.99 and its one-off installation charge of £150 will increase to £170.
The news will severely dent the government's vision of making the UK a "competitive and extensive" broadband market. Oftel recently announced that UK broadband prices are higher than in France, Germany and the US, and in a survey of home high-speed access penetration, the UK was second to bottom.
Freeserve said that BT Ignite, BT's wholesale access service for ISPs, needs to come down from £35 a month to £15 before broadband access can become mass-market.