UK satellite broadcaster, BSkyB (Wikipedia), is expected to reveal details of its long-term broadband internet strategy on July 18, reports Teleclick.

Many analysts expect the company to offer free high-speed internet access to select customers. Such a move would attract new users, while encouraging existing customers to pay more for top-tier service plans. It will compete with the free and low cost internet offerings of BT (Wikipedia) and NTL (Wikipedia).

BSkyB first entered the broadband market last year with the £211 million purchase of Easynet, a high-speed internet provider. The company has since been installing its own network equipment at BT telephone exchanges, which will allow Easynet to serve half the UK population by late December.

“Unbundling will allow Sky to extend its reach in urban areas into blocks of flats and will enable it to offer a triple-play service for the first time. Unbundling will increase competition, principally in urban areas and particularly for basic TV services, and will undermine the relative position of cable, Sky’s main competitor,” predicts market research firm, UBS.

The new service could initially lose £70 million to £100 million. In the long run, however, the Easynet service should boost profits by reducing “churn rates” and “locking in” television and digital phone customers who might otherwise turn to another provider.