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Ok so it isn't confirmed but it's an interesting possibility. And before people outside the UK start saying it's nonsense, free consoles with contracts are pretty common here for mobile phones so an extension to home phones and broadband is very believable.

http://www.xbox360wire.co.uk/2008/02/12/bt-microsoft-partnership-free-xbox-360/

BT & Microsoft partnership = free Xbox 360?

Earlier this year at CES’08 - Microsoft announced a strategic partnership with the UK’s biggest telecoms provider BT (British Telecom) to provide access to it’s ‘BT Vision’ content on the Xbox 360.

Due to arrive in late 2008, the content includes TV shows and movies but critically not in the HD format we’ve all bought those expensive tele’s for. A further chink in the armour is a complete lack of PVR functions, something which Sony is keen to push with it’s PlayTV service.

On top of all that, the BT Vision content will only be made available to subscribers of BT’s total broadband package - possibly reducing opt-in to a small percentage of Xbox 360 owners in the UK who don’t use an alternative broadband provider.

Things seem to be changing though, with the recent announcement that BT (in partnership with Motorola) will indeed provide HD content for the platform from early next year. Further whispers seem to suggest BT will soon begin to offer a free Xbox 360 console to anyone signing up for a Total Broadband package. No suggestion on whether this will be a Core, Premium or even an Elite package but it would seem ridiculous to offer streaming content then provide a console with no means of storing it - my money’s on a free Premium.

These rumours are hardly surprising, with other UK broadband providers offering free Laptops (Carphone Warehouse/AOL) for anyone signing up to an 18 month contract. Perhaps BT are getting hefty discounts on bulk purchases of the 360 consoles given their partnership with Microsoft?

BT currently offer a free Xbox 360 Wireless adaptor for new subscribers - hell, they even sell the HD-DVD add-on at the BT Shop.

We’ve contacted BT for clarification on this rumour and will report back when we get a response.