Broadband, home phone and mobile broadband provider O2 said it is launching a range of new packages designed to suit the specific needs of consumers and offer better value for money.

The company said UK consumers waste more than a combined £700 million each year by choosing an internet service based on the advertised connection speeds rather than opting for the packages that best suit their needs.

O2 said there are not enough bundles available that offer tailored broadband and phone packages - meaning customers often pay a premium for services they do not need, or ones that cannot be delivered due to network inadequacies.

It says its new deals will offer cheaper alternatives that reward consumers by providing only the level of service they require.

O2's study found that while most people pay for a package offering "up to 20Mbps per month", a majority only need an 8Mbps connection. In addition, Ofcom says the average UK broadband download speed is just 5.2Mbps, so paying more for a faster headline rate may be a waste of money.

Felix Geyr, head of O2 Home and Broadband, said...

"62% of broadband consumers in our survey would prefer their ISP to provide packages based around their specific needs.

"Therefore, our industry needs to tailor its services to people's needs, help consumers understand exactly what they should be buying and avoid marketing based solely on speed.

"It would be much more transparent if we took the same 'a la carte' approach offered to customers buying digital TV packages, where people can opt in to obtain more expensive services like film and sport."