BT plans £1.5bn fat pipe upgrade

BT is planning to spend £1.5bn on significantly upgrading its broadband network to support next generation super-fast internet.

The plans aim to give 10 million UK homes fibre access by 2012 with bandwidth of up to 100Mbps - and potentially up to 1,000Mbps in the future.

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BT says the planned investment is part of its strategy to deliver next generation broadband service across the country to help join "the world super league for broadband speeds".

But the company has said comms industry regulator Ofcom needs to look at changing the regulatory environment in order to ensure a "fair rate of return" for companies looking to roll out the technology.

These measures include removing barriers to investment and making sure organisations investing in fibre can make a return on the money they spend.

A BT spokesman told silicon.com these barriers include a universal service obligation to put copper wire into new homes, something which is high cost but which fibre takes away the need for.

Ofcom CEO Ed Richards said the plan shows the UK is moving in the right direction with these new networks forming a critical part of the UK's infrastructure.

He said the industry needs to roll out super fast broadband and acknowledged regulations need to "provide the right incentives for operators to invest, recognising the inherently risky nature of these investments".

An Ofcom spokeswoman told silicon.com: "There may well be certain rules that apply to the copper world that they may feel need to be relaxed but those are all things that need to be worked out."

She added: "The difference between the existing copper networks and fibre obviously represents a significantly risky investment. That's why we're saying that we would set a rate of return that reflects that risk."

"We're certainly keen to engage with BT to work out an appropriate way that they can invest and to give them as much clarity as possible on the regulatory environment," she said.

CEO of the Broadband Stakeholder Group, Antony Walker, said the announcement is not the whole answer but is a significant step forward.

Matt Yardley, analyst at Analysys Mason, said that the move by BT will "remove some of the awkward questions about why are we languishing behind many other nations in the provision of high-speed broadband".

BT CEO Ian Livingston said broadband is now an essential part of customers' lives and the plans mark the "beginning of a new chapter in Britain's broadband story".

Livingston said the aim is for urban and rural areas to benefit from the investment and the company is looking to work with local and regional bodies to deploy the tech in the best way.