Broadband gets broader for BT

BT wants to spend £1.5bn upgrading the UK broadband network - if the regulator doesn't cramp its style.

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Last Updated: 31 Aug 2010

BT has outlined plans for an ambitious overhaul of its broadband network, spending £1.5bn to provide super-fast broadband access via swanky new fibre cables – much like those it already supplies to its 120,000 business customers in the UK. If the regulator plays ball, as many as 10m people in the UK could end up with broadband speeds more than ten times faster than we get at the moment.

If it comes off, the difference will be noticeable: currently BT’s fast broadband service runs at a maximum of about 8Mbps (and not many people end up with anything like that speed). With the new network, houses that can be reached directly by the fibre cables might get 100 Mbps, while even those of us forced to rely on street corner distribution cabinets could end up with 40 Mbps – about five times the current maximum speed. This should mean you can carry on downloading music while your kids shoot at people on the other side of the world via their Xbox.

It’s the first big move by new BT CEO Ian Livingston, the former retail boss who recently took over from Ben Verwaayen. ‘This marks the beginning of a new chapter in Britain’s broadband story,’ Livingston said today. ‘We now want to make a step-change in broadband provision which will offer faster speeds than ever before.’ He also insisted that the  move would not accentuate the town/ country divide: ‘Our aim is that urban and rural areas alike will benefit from our investment,’ he said.

The only possible spanner in the works could be telecoms regulator Ofcom, which may be concerned that the new network will give BT an unfair advantage over smaller rivals. BT insisted it would sell its service wholesale, to ensure competition in the market – but it admitted the plan was dependent on having the ‘right regulatory environment’, saying ‘the funds required are extremely large and companies need confidence that risk-taking can be appropriately rewarded’. Livingston is presumably learning quickly that the main part of the BT CEO job is this delicate dance with the regulator, as both sides try to further their own agendas...

On the other hand Ofcom seems to be making all the right noises; recently it called on the big telecoms companies to offer faster broadband speeds, and suggested that it would favour a framework that would allow providers to make a decent return on risky infrastructure investments. So Livingston will be hopeful that BT can cut a reasonable deal.

Although the new network will be good news for any of us with a serious downloading habit, it won’t please everyone. BT is dropping its £2.5bn share buy-back scheme, which is only about two-thirds complete, to pay for the upgrade. So shareholders might have a bit less to smile about...


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