This target will see BT making super-fast broadband available to some 40% of homes in rural and urban areas across the UK. The areas covered by the rollout will be influenced by the level of support BT gets from local and regional authorities.
BT claims that fibre connections will give customers enough speed to run multiple bandwidth-hungry applications such as high definition movies. The new broadband services will also offer "substantially improved" upstream speeds, allowing consumers to post videos, use hi-definition video conferencing and enjoy interactive gaming to the full.
Most of the deployment will be fiber-to-the-curb (FTTC), which will involve running fibre from local telephone exchanges to a street cabinet, with the final connection to the home being a VDSL2 service over copper.
True fibre-to-the-home (FTTH) will only be rolled out in greenfield developments, such as the new commuter town of Ebbsfleet in South East England, and in the Olympic Village being built outside London for the 2012 Olympic Games (see BT breaks new ground with FTTH).
Ebbsfleet, where the first homes will be connected with fibre this summer, is the "proving ground" for FTTH, according to Tim Hubbard, head of 21CN technology and platform introduction at BT, who presented an update on 21CN at IIR's WDM and Next-Generation Optical Networking conference in Cannes last month. The experience gained at Ebbsfleet will be instrumental in working out how to roll out fibre on a national scale, he said.
The architectural choice at Ebbsfleet is GPON, but BT is actively investigating future technology alternatives, and has not stated what technology it will use for its next-generation access plan (see BT tackles next-gen PON).
So what changed BT's mind on next-generation access? One obstacle, the cost of the massively ambitious 21CN project, has been pushed aside. 21CN was conceived at a time when next-generation access wasn't even in the picture, says Hubbard. But plenty has happened in the last couple of years, with internet video traffic skyrocketing, and changing bandwidth requirements out of all recognition, which has forced the operator to rethink its strategy.
The planned £1.5 billion investment includes £1 billion of new capital expenditure, and £500 million of funds already earmarked for fibre deployments — BT provides fibre access to 120,000 business customers.
BT plans to spend £100 million on FTTx in the current financial year, bringing total capex spend for 2008/2009 up to £3.1 billion, and £100 million in 2009/2010. The remaining £800 million will be spread over the following three years. To help finance this plan, BT is suspending its current share buyback program from the end of July.
The other stumbling block, of course, is the stringent regulations applied to the former UK monopoly, which require BT to open up its copper access network to competitors. BT argues that this mandate should not be applied to new fibre-optic infrastructure.
Rules and regulations
BT says its new broadband plan will founder unless UK communications regulator Ofcom can agree a regulatory regime that allows the operator to make a decent return on its investment. BT also wants to be treated fairly compared to other network operators with high-speed access networks — the most obvious being Virgin Media — who are not required to provide wholesale access at present.
The timing seems to be right on the regulatory front. Earlier this month, Ofcom announced that it will engage in discussions on how to encourage "risky investment" in next-generation access, because the internet is a crucial tool for boosting the economy (see Ofcom outlines investment plan for super-fast broadband).
"We are very clear that if operators are going to make investments in new infrastructure, investment that is inherently more risky than developing the existing infrastructure, then they need to know that the regulatory framework will allow them to make and keep a rate of return that is commensurate with the risks they are taking," Ofcom said in a statement.
Of course, its worth pointing out that there never really was a barrier to FTTH deployment on new-build sites in the first place. These days "you'd have to be mad to string up copper", as one industry observer quaintly put it.