Green light for super-fast broadband plans
Ofcom price ruling gives BT incentive to invest in fibre
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Your support makes all the difference.BT's plans to spend £1.5bn rolling out super-fast broadband infrastructure were given the go-ahead by the regulator yesterday.
Ofcom has ruled that BT can set its own wholesale prices for access to next-generation networks, enabling the group to make the returns needed to justify high up-front investment costs.
The company is already laying fibre-optic cables between local telephone exchanges and street cabinets, raising broadband speeds from about 10 megabits per second (Mbit/s) to nearer 40 Mbit/s – fast enough to watch live television. But the plan for so-called "fibre-to-the-cabinet" to about 40 per cent of households, or 10 million homes, by 2012, was predicated on the freedom to set wholesale prices at a suitable rate of return. After months of uncertainty, the regulator has agreed.
Ofcom is a vocal proponent of the potential economic and social benefits of UK-wide next-generation broadband infrastructure. Ed Richards, the chief executive of Ofcom, said: "Our message is clear: there are no regulatory barriers in the way of investment in super-fast broadband."
But the cost of a new national infrastructure is prohibitively high. To lay fibre to individual households across the country, which would provide internet access speeds of up to 100 Mbit/s, could cost anything up to £30bn, according to estimates. Even the less costly fibre-to-the-cabinet has a national price tag of up to £7bn.
BT has not stood still. It is offering a 100 Mbit/s service at a newly built housing development in Ebbsfleet Valley, and is poised to provide 40 Mbit/s to 30,000 residential customers – via third-party broadband suppliers. But major progress in the UK was stalled by the difficulties making the economics of the capital investment make sense, while international rivals from France to South Korea were racing ahead.
The regulator's announcement yesterday will open the floodgates. Ian Livingston, the BT chief executive, said: "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 super-fast and innovative services. Now it's all about delivery."
Rival service providers are already looking at fibre. Virgin Media, which owns the cable network serving about half of the country, is also pushing ahead with next-generation broadband. The 50 Mbit/s scheme, launched in December, should be available to around 12.6 million households by the summer.
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