BT invests £1.5bn in superfast broadband

BT is set to inject £1.5bn into upgrading its broadband network, it was announced today.

BT plans to roll out its fibre optic network to 10 million homes by 2012.

At that point the network will be made available on a wholesale basis so that other operators can re-sell the service, just as is the case with ADSL today.

This is in contrast to Virgin Media's fibre optic (cable) network, which is closed to competing firms, although it has been mentioned Ofcom may eventually rule that Virgin Media must share it's network too.

BT Chief Executive Ian Livingston said, "This is an important step and will allow the market to develop the next generation of the UK's broadband infrastructure, which is so critical to the UK's future as a knowledge-based economy."

"The stage is now set for a wide variety of players, of all different shapes and sizes, to do their bit in providing consumers with a choice for superfast and innovative services. Now it's all about delivery."

By 'superfast' he means speeds between 40Mb and 100Mb a second.

By the end of the year, Virgin Media will be offering broadband speeds of 50Mbps across its entire fibre optic network which covers access for 50% of the population.

BT's plans are set to break Virgin Media's monopoly on the fibre optic market.

The prospect of BT upgrading its network is in keeping with the Government's aim of delivering universal broadband across the UK by 2012.

Digital Britain

The Government's interim Digital Britain Report, drawn up by Lord Carter, aims to have in place a universal broadband service that delivers 2Mbps by 2012. Such a speed seems paltry in comparison to the staggering fibre optic speeds that BT is set to offer, but some argue that 2Mbps is a good platform from which to build.

Tim Johnson, Chief Analyst at broadband think tank Point Topic, is one such supporter. "We believe that investing to deliver 2Mbps could provide the platform for full next-generation broadband in areas where it wouldn't otherwise happen for many years."

Essentially, investing in a broadband service of 2Mbps in the slowband areas of the country could act as an incentive for further investment for greater speeds.

However, there are dissenting voices on the horizon who maintain that 2Mbps is simply not enough to enable Britain to compete with the digital landscape of California or the emerging markets in the far-East.

At the risk of over-complicating what is quite a simple matter, the debate over whether 2Mbps is enough surely boils down to demand for the service. It would be naïve to think that broadband is, or could be non-essential in the future. But at the same time, will there be enough demand for 'superfast' broadband as will soon be offered by BT?

A geographical comparison

The days of dial-up internet offering 256 kilobits per second have been consigned to history. The era of fibre optic technology is just beginning.

Point Topic has produced a geographical breakdown of broadband availability in the UK which highlights the great urban rural divide.

Johnson says that "The picture varies a lot across the country of course. We estimate over 90% of households in Swindon have broadband, and about 99% of them can get reasonable speeds. On the other hand in Teesdale, deep in the Pennines, only 25% of households have broadband. Over 40% of them are out of range to get 2Mbps - the speed that Lord Carter suggests should be the target for universal service."

It seems then that the target of 2Mbps by 2012 is a realistic target and one that needs to be met to engender the economic growth that broadband can stimulate.

Investment in fibre optic technology is surely the best way to progress in order to 'future proof' Britain's network.

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