Sky is planning to introduce a broadband product into the Republic aimed at its 407,000 Irish TV subscribers within the next year.

The company expects to offer a fixed line broadband offering via local exchanges owned by Eircom. The company will either introduce its own product or acquire a local operator. Talks have already been held between Sky executives and Irish telecoms companies about the broadband market.

At this early stage an acquisition is not planned and the talks were simply about the state of the market. Sky Ireland's customers have been increasingly contacting the company asking when the company might introduce broadband. The company now believes it is time to find a way to supply these customers.

At present Sky Ireland, which is part of BSkyB, has 407,000 subscribers for its digital television service, but new figures to be released next month are expected to show a much higher figure.

With that kind of subscriber base, the company would represent a major threat to existing broadband players like Eircom, Smart Telecom and BT Ireland.

Yesterday in the UK BSkyB unveiled plans to bundle free high-speed internet access with its satellite TV service and it expects to have at least three million broadband customers by 2010 as it takes on rivals such as BT Group.

The company, 38 per cent owned by Rupert Murdoch's media conglomerate News Corporation, said it anticipated investment of Stg£400 million (€584 million) of earnings before interest and tax over the next three years in the new service.

It also said there would be an additional Stg£250 million of capital expenditures. However, the markets were sceptical of such costs and the company's shares were down 5 per cent. - (Additional reporting by Reuters)