BT - FTTH announcement 15 July 2008

[ Keywords: Next generation networks - competition - wholesale - equivalence of access - open networks - regulation - Ofcom - consumer - business - urban - rural - government, regional, local authorities ]

BT Press Release | NR08-262 | July 15, 2008 |BT plans UK’s largest ever investment in Super-Fast Broadband

• £1.5 billion programme to give up to 10 million homes access to fibre by 2012
• Plans dependent on regulatory regime and certainty
• Dividend guidance reaffirmed, share buyback suspended from July 31 2008

BT today announced plans to roll out fibre-based, super-fast broadband to as many as 10 million homes by 2012. The £1.5 billion programme will deliver a range of services with top speeds of up to 100 Mb/s with the potential for speeds of more than 1,000 Mb/s in the future.

The investment forms part of BT’s wider strategy of delivering next generation broadband services nationwide. The UK already has world leading broadband availability and this investment programme offers the prospect of joining the world super league for broadband speeds as well.

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.

“This is a bold step by BT and we need others to be just as bold. 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. Given this, BT will be discussing with Ofcom the conditions that would be necessary to enable this programme to progress. These include removing current barriers to investment and making sure that anyone who chooses to invest in fibre can earn a fair rate of return for their shareholders.

Fibre-based super-fast broadband will give customers enough speed to run multiple bandwidth-hungry applications. So, for example, some members of a family could be watching different high definition movies while others were gaming or working on complex graphics or video projects. The new services will also offer substantially improved “upstream” speeds allowing customers to post videos, use hi-def video conferencing and enjoy interactive hi-def gaming to the full.

BT already provides fibre to the premises of more than 120,000 businesses, and has deployed more than 10 million kilometres of fibre in the network.

BT is committed to wholesaling its new services – unlike many other companies and countries – thereby ensuring Britain remains the most competitive broadband market in the world. BT will also be pressing for any other next generation access network in the UK to be open to other companies.

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Q & A

(...) Which areas will benefit first from this investment?
BT will work with Government and regional and local authorities on the roll out plans. They can help ensure there is demand for fibre and so we look forward to working with them to ensure our roll-out is demand-driven. Our aim is that both urban and rural areas will be able to benefit.
Will fibre only be available in large cities as has happened in other countries?
No. Our aim is that fibre will be widely available and not just in the major cities – unlike in some countries. Its precise deployment will depend on the engagement of government and regional and local authorities but there is no reason why it should not be available in a variety of environments.

(...)

Is this investment dependent on Ofcom creating a new regulatory framework?
Yes. The right regulatory environment is vital for anyone seeking to invest. The funds required are extremely large and companies need confidence that risk-taking can be appropriately rewarded.

Will BT exclude other companies in the way companies have in other countries?
No. BT is totally committed to a wholesale market and so will make its services available on an equivalent basis to all communications providers.

Does BT believe that other next generation networks should also be open?
Yes. BT’s firm belief is that all next generation networks in the UK should be open as this approach will boost competition and consumers and businesses will benefit.

(...)

Are you taking action to reduce the congestion caused by services such as the BBC’s iPlayer?
Yes. BT has made it much cheaper for companies to buy extra capacity on the “backhaul” pipes that link exchanges to the core network. This move should ensure Internet congestion is minimised. BT will also invest significant funds in improving core network capacity. Both measures should ensure customers on BT’s network will enjoy a higher quality of service than those on cable networks where contention and internet congestion has been more of an issue.

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