Details of Sky Broadband's offering have been fiercely guarded, but insiders believe the focus will be on bundled entertainment packages.
Of Sky's pay-TV subscribers, 47% already have broadband. The company plans to target this audience aggressively with price promotions to encourage them to switch provider to Sky.
The launch is expected to spark a fierce price war in an already competitive marketplace. Analysts believe it could lead to a record low in broadband pricing, as well as a flurry of short-term price promotions and marketing.
NTL, which will rebrand its broadband services under the Virgin name in 2007, has already slashed its prices for broadband and TV packages. BT, TalkTalk and Orange are expected to follow suit.
'We think people have been paying too high a price for broadband and, as a well-known entertainment brand, we have something more to offer,' said a Sky spokesman.
Sky's move into the sector follows its acquisition of broadband services group Easynet for £211m in January. It is now expanding its capability in a process known as 'local loop unbundling'.
Morgan Stanley predicts that Sky will have gained a 10% share of the market by 2010, when broadband penetration in the UK is expected to have reached 69%.
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