Research by uSwitch.com has revealed that five million households in the UK are paying more than the going rate for their broadband, wasting £162m a year.

The price comparison site compared the average price for the most popular speed in January 2004 against the same for 2008. Four years ago, customers could expect to pay an average of £27 a month for broadband with a standard speed of just 0.5MB. Today, the majority have signed up to a headline speed of 8MB costing an average of £17 a month. This is a saving of £120 a year for a service 16 times as fast.

The broadband market is dominated by the same key players that first piped high speed internet into homes four years ago, but while some companies have slashed prices by as much as 46%, others have dropped their charges by just 29%.

Steve Weller, head of communications services at uSwitch.com, said: “With broadband both the cheapest and the fastest it’s ever been, our love affair with the internet is set to reach great heights this year.

“We predict that prices will stabilise, but customers will be offered more for their money, with companies continuing to increase speeds. We advise the three million customers currently not in a contract to kick start 2008 by snapping up a new broadband deal.”