BT is to link up with Yahoo to give customers access to firewall and antivirus services, as well as premium web content such as gaming, music and financial services.
The telco will end its relationship with anti-spam company Brightmail, and will incorporate Yahoo's SpamGuard filter.
BT customers will be given a built-in firewall and antivirus protection at no extra cost, according to BT Openworld managing director Duncan Ingram.
Subscriptions for the revamped services will remain the same - broadband at £30 per month and dial-up at £16 per month - but BT will dump the Openworld branding.
Its broadband service will be renamed BT Yahoo! Broadband, and its dial-up access BT Yahoo! Anytime.
Ingram explained that the move is a "win win" situation for all concerned. Customers will receive what he calls "more compelling services" while both companies will benefit financially.
BT will pay Yahoo a set amount for each customer it signs up, in return for some of Yahoo's revenue from e-commerce and advertising.
"This is about providing the next generation of broadband which will push forward ADSL take-up," said Ingram.
"Customers' levels of experience and choice will grow and this move will make our competitors, such as AOL and Freeserve, sit up and think."
BT Yahoo! Broadband will be available to new customers from September. Existing BT Openworld broadband customers will move to the new service in a phased programme.
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