BT is eyeing a more ambitious rollout of fiber-to-the-premises technology, covering a greater number of households and businesses than the 2 million in its current plan, despite its new financial difficulties. (See BT Looks to Home Comforts Amid Italian Crisis.)

During an earnings call last Friday, the UK operator told analysts that with the improving economics of higher-speed broadband technologies it could start to think about raising its FTTP targets.

Under the existing plan, BT Group plc (NYSE: BT; London: BTA) plans to extend FTTP to about 2 million premises by 2020, up from about a third of a million today. Another 10 million premises are to be upgraded using a technology called G.fast, which boosts connection speeds over last-mile copper loops and is currently being trialed.

This mix could easily change, however, according to senior executives at the company.

"We've spent a lot of time honing techniques for delivering FTTP and the challenge was to hit lower cost points than was previously thought possible," said Clive Selley, the CEO of BT's Openreach infrastructure division. "The more we can do that the more we can consider adjusting the mix of 10 million G.fast and 2 million FTTP [premises]."

Quizzing executives about their FTTP ambitions, analysts pointed out that BT has recently come under some political pressure to spend more on so-called "gigabit-speed" networks.

Politicians are concerned the UK could fall behind other parts of the world in the "digital economy" if it does not replace the ageing copper lines that underpin most broadband services with higher-speed fiber lines. Critics calling for the break-up of BT have also argued that its reluctance to invest in fiber is an unwelcome consequence of its dominant market position.

While BT denies it has under-invested -- pointing to recent studies that show the UK leads other European countries on broadband capability -- it finds itself in an awkward situation.

Concerned about BT's growing power, and eager to placate BT's rivals, UK regulator Ofcom has warned the incumbent that it will mandate a strict form of "legal separation" -- erecting barriers between Openreach and the rest of the BT Group -- unless BT comes up with a satisfactory alternative. It has even threatened BT with so-called "structural separation," making Openreach an entirely different company, unless BT shapes up. (See Only BT's Dismemberment Will Sate Rivals.)

Having promised to upgrade broadband infrastructure if it is not broken apart, BT is desperate to impress regulatory officials and market observers.

But its ability to fund a more widespread FTTP rollout was called into question during the recent earnings call following a profit warning earlier in the week.

After conducting a lengthy investigation into accounting irregularities in Italy, BT said the scandal would cost it more dearly than it had originally expected. It is also anticipating a deterioration in UK public-sector and international corporate markets. (See BT's Patterson Feels Italian Heat, Eurobites: BT's Italian Bother Claims Sciolla's Scalp and Dodgy Italian Job Savages BT Earnings, Share Price Tanks.)

As a result, it is now guiding for zero revenue growth this fiscal year (which ends in March) and the next one, and it says earnings (before interest, tax, depreciation and amortization) will be £300 million ($375 million) less this year -- at £7.6 billion ($9.5 billion) -- than it was previously expecting.

Because BT has promised to boost dividends for shareholders, it may struggle to keep increasing capital expenditure.

Stripping out any investments by the EE mobile business it acquired last year, BT spent around £2 billion ($2.5 billion) over the first nine months of the current fiscal year, about 6% more than over the same period a year earlier.

Executives, however, appear to be confident that BT can meet its current rollout targets, and even increase the FTTP share of that plan, without changing the outlook on capital expenditure.

"The outlook reflects existing investment plans and includes the NGA [next-generation access] program of G.fast and FTTP that we set out earlier," said Simon Lowth, BT's chief financial officer, during the earnings call. "That is a program that we can flex between different technologies and we are working to deliver it more efficiently and productively."

Last May, BT said that its Openreach and EE divisions would together invest about £2 billion ($2.5 billion) annually over the subsequent three years to account for the G.fast and FTTP plan as well as mobile broadband spending. (See BT to Cover 2M Homes With FTTP in $8.7B Plan.)

The figure of £2 billion ($2.5 billion) is roughly what Openreach and EE spent in 2015, with the two infrastructure units together investing just less than £1.6 billion ($2 billion) in the first nine months of this fiscal year.

Next page: How much is this going to cost?

How much is this going to cost?
Analyst skepticism that BT would be able to increase FTTP targets without incurring additional expenses is hardly surprising: Digging up streets to lay new fiber lines is reckoned to be far costlier than rolling out G.fast equipment. And BT's planned G.fast deployment already looks economical: To minimize costs, BT intends to install equipment at existing street cabinets, of which it maintains about 90,000, instead of at millions of small distribution points near customer premises.

Asked how the cost per home of deploying FTTP compared with that of G.fast, BT CEO Gavin Patterson refused to provide figures. "We never give the cost-per-home figure because it can change dramatically depending on topology and progress on FTTP," he said. "It is a range of numbers depending on where you are rolling out."

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.

Nevertheless, Openreach boss Selley has previously highlighted some of the technical developments in the FTTP area that could help to reduce expenditure in future.

Last October, during the London-based Broadband World Forum (BBWF), the operator claimed to have carried out the first European demonstration of several passive optical network technologies over a single fiber. (See BT Looks Beyond G.fast With PON Trials.)

"The significance of the trial is that it shows we can upgrade FTTP to higher speeds without rebuilding or rearchitecting," said Selley during a keynote presentation. "We just need new electronics in exchanges and customer premises."

Despite that progress, Selley told attendees at the BBWF show that any large-scale commitment to FTTP would make little economic sense.

According to his estimates at the time, an FTTP deployment covering half of the premises in BT's fiber-to-the-cabinet footprint would cost twice as much as that FTTC rollout.

— Iain Morris, , News Editor, Light Reading