Broadband users in Britain are wasting more than £700 million per year by choosing packages that do not suit their needs, a fresh study commissioned by broadband provider O2 claims.

The study conducted by Populus shows that the vast majority of people need a package of up to 8Mbps for the services they use, but they are paying for up to 20Mbps packages per month. The 8Mbps figure is derived from information relating to the online activities of 2,000 broadband user questioned.

According to the study, the vast majority of people use broadband for low bandwidth activities such as logging on to check emails (77 per cent), browsing the web (74 per cent), paying bills and using online banking (51 per cent) and for social networking (35 per cent).

Only a small fraction of people use broadband for an activity that requires high bandwidth. Compiled figures show that just 18 per cent of people make use of broadband for streaming multimedia content, while only 5 per cent use broadband to download music and 3 per cent to download movies.

Speaking on the findings, Felix Geyr from O2 said, “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.”

The study has emerged at a time when broadband providers are trying to offer the highest possible speeds.

Robert Hammond from Consumer Focus said broadband providers should stop claiming that bigger is always better.