BT has extended its relationship with Yahoo! to launch a new broadband service aimed at taking on content and access giant AOL UK.

BT Openworld's existing high-speed service will be re-named BT Yahoo! Broadband and will cost £29.99 a month.

The equation is simple. BT provides the access, customer service and billing - Yahoo! brings content and services.

It's a model that mirrors similar deals in the US where Yahoo! has teamed up with telco SBC.

BT Yahoo! Broadband (what a mouthful) will be available to new customers from September. Existing BT Openwound punters will also get their chance to move.

On the table is the prospect of a built-in firewall and anti-virus protection to provide online protection. Punters will also get oodles of other stuff including interactive gaming and access to the latest videos and music.

In a statement, Pierre Danon, CEO of BT Retail, said: "The alliance is the next step to realising a Broadband Britain, building on the one million ADSL customer mark and delivering services and content which will appeal to a mass market."

Terry Semel, chairman and CEO, Yahoo! Inc. said: "We believe that the powerful combination of Yahoo!'s world-renowned brand and BT's leading market position can help drive increased DSL adoption in the UK."

In February, BT and Yahoo! started courting after they entered a limited commercial arrangement to co-promote BT Broadband and Yahoo!'s premium services.

Earlier today BT restated its aim to have five million broadband punters by 2006 adding that it would generate £1bn a year in profitable revenue. ®

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