BT unveils broadband spending plan

JULY 15, 2008 -- BT has announced plans to roll out fiber-based broadband services to as many as 10 million homes by 2012. The £1.5 billion program will deliver a range of services with top speeds of up to 100 Mbits/sec with the potential for speeds of more than 1,000 Mbits/sec in the future -- if it gets cooperation from regulatory authorities.

BT chief executive Ian Livingston said, "Broadband has boosted the UK economy and is now an essential part of our customers' lives. We now want to make a step-change in broadband provision which will offer faster speeds than ever before. This marks the beginning of a new chapter in Britain's broadband story."

However, BT says it will need the assistance of regulatory authorities to complete its initiative. "This is a bold step by BT and we need others to be just as bold," Livingston continued. "We are keen to partner with people who share our vision for the next phase of the broadband revolution. We want to work with local and regional bodies to decide where and when we should focus the deployment. Our aim is that urban and rural areas alike will benefit from our investment"

"A supportive and enduring regulatory environment is essential if this investment is to take place," BT said in its press release. The carrier plans to discuss with UK national telecoms regulator Ofcom the conditions under which its broadband program would proceed. These include "removing current barriers to investment and making sure that anyone who chooses to invest in fiber can earn a fair rate of return for their shareholders," according to BT.

BT says it will provide fiber to the home primarily in greenfield applications, with fiber to the curb (FTTC) the preferred architecture elsewhere. The carrier currently has an FTTH trial underway using GPON.

The FTTH architecture will deliver speeds of up to 100 Mbits/sec while FTTC will initially deliver speeds of up to 40 Mbits/sec. BT says it is investigating technologies that can increase the FTTC speeds to more than 60 Mbits/sec.

BT claims to provide fiber to the premises to more than 120,000 businesses already, and has deployed more than 10 million km of fiber in the network. However, not all areas of the country will see fiber rollouts. ADSL2+ technology will be used to deliver broadband to subscribers in these regions. The carrier didn't announce which regions would benefit from the fiber investment and which wouldn't, only that fiber would reach both urban and rural areas.

The carrier asserts that it is committed to wholesaling its new services. BT also will press for any other next generation access network in the UK to be open to other companies.

BT plans to invest around £1.5 billion in total on the program, of which around £1 billion is incremental to BT's existing expenditure plans for fiber deployment.

BT expects its initial investment in the program will result in around £100 million of incremental capital expenditure in each of the 2008/09 and 2009/10 financial years, taking the total expected capital expenditure in those years to around £3.2 billion and £3.1 billion, respectively. The remaining incremental spend of £800 million will be spread over the following three financial years.

The broadband initiative received kudos from Analysys Mason, a London-based company that provides strategy advice, operations support, and market intelligence. "At last, BT has decided to invest in fiber on a large scale," wrote Matt Yardley, partner at Analysys Mason. "This is great news for the UK, and will remove some of the awkward questions about why are we languishing behind many other nations in the provision of high-speed broadband. BT's announcement is primarily about VDSL/FTTC, with some limited FTTH. Financially, this is a sensible step for BT, and should not preclude a move to more widespread FTTH in the longer term."

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