O2 has entered the mobile broadband fray with a service allowing customers to access the internet from their laptops over 3G or Wi-Fi.

The new service is being offered to existing O2 customers for £20 per month with a 3GB data cap, although this includes unlimited Wi-Fi through the 7,500 hotspots run by The Cloud in the UK.

O2 Mobile Broadband will be offered on an 18-month contract or a rolling one-month contract similar to O2's Simplicity mobile phone contract.

However, those opting for the rolling contract will have to pay £119.99 upfront for the modem, whereas those signing up for the full 18 months will get it for free.

As well as being able to monitor data usage through the modem's software, users will be warned via text message when they reach the 2GB point and will be informed directly by phone when reaching the 3GB cap.

Data used over the 3GB cap will be charged at 20p per megabyte and users will be informed again if they use £100 worth of data over their cap.

However, as part of the launch promotion, until 31 October users who exceed the 3GB cap will not be charged.

The small USB 'memory stick' style 3G modem will automatically connect customers to the fastest network available be it GPRS, EDGE, 3G, HSDPA or Wi-Fi.

O2 said that it wants to offer customers a complete broadband experience not by being first to market, but by making sure that the service meets customer expectations.

O2 says that it now has 99 per cent GPRS coverage of the UK population and is well ahead of schedule to reach its target of 80 per cent 3G coverage by May 2008 as set out by Ofcom.

This means that users should experience broadband speeds of up to 1.8Mbps across the whole O2 network and up to 3.6Mbps from June.