BT has ignited a war of words between rival broadband provider BT after launching a new super fast home broadband service in direct competition with Virgin Media’s offering.

Since late 2008, Virgin Media has been the UK’s only fibre optic broadband provider, thanks to heavy investment in a next generation network. Adoption of this technology enabled the company to offer consumers a connection speed of up to 50Mb to those who signed up to its high-end XXL package.

However, last week BT announced a rival fibre optic home broadband service, dubbed BT Infinity. Priced from £19.99 per month, Infinity subscribers can access internet connection speeds of up to 40Mb. This will be available to four million homes by the end of December 2010.

According to BT, those who choose the lower cost Option 1 can also expect upsteam speeds of up to 2Mb and are subject to a 20Gb monthly usage limit. Meanwhile, Option 2 customers are in line for a maximum upstream speed of 10Mb and unlimited monthly downloads for £24.99.

Alongside its announcement, BT made up of its forthcoming additions of its product portfolio’s pricing in comparison to Virgin Media’s existing super fast broadband deals. In particular, the broadband supplier noted that Infinity Option 1 is £7.47 per month cheaper than Virgin Media’s flagship XXL broadband package.

BT also highlighted that the maximum upstream speed of up to 10Mb with Infinity Option 2 is the fastest in the UK and is over six times faster than Virgin Media’s fastest service. This means that BT customers can expect much greater interactivity, BT claims.

The announcement has prompted a hard-hitting response from Virgin Media. Chief among its counterpoints are that although BT’s service uses VDSL technology the “last stretch” to their customers’ home is copper wire. This means that “unlike Virgin Media, their broadband will still be affected by distance” with the result that “many BT customers will not get the speeds they expect”. BT’s claims that its service represents better value was also attacked in an official statement from Virgin Media.

According to Virgin Media, the lower headline price of Infinity Option 1 is illusory because of the 20GB monthly download limit that BT applies. This is enough to download just four High Definition movies per month, Virgin Media calculates.

Virgin Media further sought to undermine BT’s announcement by questioning BT’s calculations that its service is almost £8 per month cheaper. This statement does not hold up because “BT insists on customers having to take phone line from them which costs a further £11.54”, Virgin Media claims. However, Virgin Media’s optional phone line is just £11 per month, meaning that the 40Mb service is in fact just £2.47 cheaper” for what Virgin Media dubbed a “much slower service”.

The exchange of words between two of the UK’s largest internet service providers has set the scene for a dogged battle for customers in 10 months time when BT Infinity becomes officially available.

Right now, the situation between the two companies is akin to the so-called phoney war that followed Britain’s declaration of hostilities in 1939. But you can rest assured that relations between the suppliers won’t be this cordial come December.