BT Outlines Conditional Gigabit Vision for UK

UK fixed-line incumbent BT has hit back at its critics, who have been urging regulators to break up the national operator's business, by stating that in its present form it will be able to exceed government targets for high-speed broadband availability and make other dramatic improvements to network services.

CEO Gavin Patterson has pledged to provide services of at least 5-10 Mbit/s to all households and to go beyond the government's target of covering 95% of the country with fiber-based networks (which includes fiber-to-the-cabinet and not just fiber-to-the-home/building).

BT says it could boost its fiber-based network coverage to 96% of UK premises by using "success clause" money from existing network projects that have been financially supported by national or local government funds. Under existing contracts with UK government bodies, BT Group plc (NYSE: BT; London: BTA) has to reinvest or return public funds money if certain customer uptake thresholds are reached: BT says £130 million ($201 million) is now available as a result of this scheme and could "potentially" be used to invest in extended fiber-based coverage.

Patterson has also unveiled a clearer and more ambitious target for BT's ultra-fast broadband rollout than the one delivered in January, saying the operator will be able to provide 300-500Mbit/s services to as many as 10 million homes and small businesses by the end of 2020 and to most premises in the country within a decade.

BT's boss said that 1Gbit/s services will be provided "for those that want even faster speeds."

Most of these higher-speed connections are to be delivered using G.fast, an emerging technology that super-charges copper connections by extending the range of frequencies over which broadband signals travel. G.fast is unlikely to be capable of supporting 1Gbit/s services in most cases, however, and Patterson has indicated that fiber-to-the-premises technology figures in BT's latest ultra-fast plans.

BT first outlined plans for G.fast in January, when it promised to make broadband services of up to 500 Mbit/s available to most of the population by 2025. (See BT Puts G.fast at Heart of Ultra-Fast Broadband Plans and BT Plots G.fast Rollout, Mobile Launch.)

The operator has recently begun field trials of G.fast and intends to provide an update on progress at Light Reading's forthcoming Gigabit Europe event, which will be hosted in Munich on September 28 and 29.

Currently, BT's fastest advertised broadband speed is 76 Mbit/s.

Besides shedding further light on BT's ultra-fast goals, Patterson also said the operator would introduce a satellite broadband service in some remote parts of the UK by the end of the year.

But in a company statement, he warned authorities that BT would not be able to make a "commercially viable investment" without a supportive regulatory and government policy environment, having previously argued that broadband investments will suffer if the operator's infrastructure business is separated from its retail arm.

The rollout of gigabit broadband access networks is spreading. Find out what's happening where in our dedicated Gigabit Cities content channel here on Light Reading.

Rivals have been urging Ofcom to get tough on BT, concerned it may have an unassailable position in the UK's communications market following a merger with mobile operator EE unless authorities take radical steps. (See Split BT to Lessen Regulation, Says CityFibre and Ofcom Does Not Rule Out BT Carve-Up.)

BT agreed to buy the country's biggest mobile operator from joint-venture parents Deutsche Telekom AG (NYSE: DT) and Orange (NYSE: FTE) in a £12.5 billion ($19.3 billion) deal in February and it expects to complete the transaction early next year. (See BT Locks Down £12.5B EE Takeover Deal.)

Earlier this week a number of BT's rivals expressed their dissatisfaction with the status quo in a letter to the Financial Times (subscription required). (See Eurobites: Rivals Sharpen Knives Over BT Broadband.)

Sky , TalkTalk and Vodafone UK would like Ofcom to follow the example of several other national regulatory authorities and mandate the "structural separation" of the former state-owned monopoly.

They believe such a measure would solve the problem of "margin squeeze," whereby BT is able to exert pressure on broadband rivals through a mixture of high wholesale and low retail prices.

The rationale is that, as a standalone entity, BT Retail would be in the same position as the country's other players, while Openreach -- BT's access network infrastructure business -- would have no incentive to favor BT Retail in any way.

Given the looming merger between BT and EE, another concern is that other mobile operators will effectively be forced to purchase backhaul services from a rival unless BT is carved up.

Openreach has come under particularly heavy attack from pay-TV market leader Sky, which has accused the organization of providing a shoddy level of service to its customers. (See BT Guilty of 'Under-Investment,' Says Sky.)

While insisting Openreach has been meeting Ofcom targets, BT acknowledges there is "more to do on service."

In today's statement, Openreach CEO Joe Garner said his ambition was to exceed "by 6%" the regulator's criteria for delivering new connections on time in 2017.

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

Mitch Wagner 9/22/2015 | 11:52:34 AM
Carrot and stick Sounds like BT is taking a carrot-and-stick approach here: Give them the regulatory requirement they want and they'll exceed broadband goals. If not, then not. 
msilbey 9/22/2015 | 10:18:26 AM
Re: Ahead of government targets Boy, BT is making the US MSOs look good. Aiming for "at least 5-10 Mbit/s"? Sounds paltry compared to the US 25 Mbps broadband threshold, not to mention gigabit efforts. 
iainmorris 9/22/2015 | 8:49:09 AM
Ahead of government targets These new BT targets for minimum service guarantees would exceed a government target of ensuring all households can access a service of at least 2 Mbit/s by the end of 2016, although regulatory authority Ofcom has previously suggested that households may need at least 10 Mbit/s to support future needs. BT also hasn't said anything about the timeframe for its 5-10Mbit/s services.
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