Tesco deal puts pressure on broadband bundlers

Tesco has signed a deal with Cable&Wireless that allows the retail giant to offer bundled broadband and home phone services to customers for the first time.

The five-year deal means that Cable&Wireless will provide wholesale broadband services, which will see Tesco making a move into the highly competitive consumer broadband and bundled services market.

This is currently the realm of ISPs like TalkTalk, Tiscali, BT and Virgin Media.

In fact, Tesco's previous broadband deal was with Virgin Media, and this new deal frees it to offer what could be stiff competition to the existing players.

In a statement, product director of Broadbandchoices.co.uk Michael Phillips said that was an "exciting development" in Tesco's plans to become a leading broadband supplier for consumers.

He said that Tesco had already made a strong start with its mobile services, and that good performance from Cable&Wireless as well as the confidence in the Tesco brand could give them the edge over the competition.

"Tesco's ambitious plans for broadband put pressure on all ISPs to focus on the importance of customer service," he said.

"Bundled packages have increased in popularity amongst consumers over the past two years, so it will be interesting to see how Tesco differentiates itself in a bid to win more custom."