Business

BT to invest £12bn in faster broadband and reaching remote areas

BT has committed to investing £12bn in getting faster broadband connections to 20m UK homes, including in remote rural areas, after the telecoms regulator Ofcom unveiled a host of financial incentives to help achieve the government’s goal of creating “gigabit” Britain.

However, some rival operators warned that Ofcom’s broadband plan could mean price rises for consumers.

The government has also announced the next areas to benefit from its £5bn Project Gigabit scheme to help fund the more costly rollout of next-generation broadband to rural areas. More than 1m hard-to-reach homes and businesses in 15 areas including Cornwall, Cumbria, Tees Valley, Norfolk, Durham and the Isle of Wight have been identified to benefit from the scheme, which will help cover the extra cost commercial operators will incur rolling out broadband to more remote locations.

The government is also launching a £210m voucher scheme to enable households in some rural areas to apply for subsidies to get gigabit speed broadband to their premises. In addition, £110m is being made available to get high speed internet to public sector buildings, such as GP surgeries, libraries and schools, in the hardest to reach parts of the UK.

A consultation has also been launched on how to get internet to very remote areas too expensive to build networks to, about 100,000 premises in isolated locations in Scotland, Wales and some national parks in England, which could result in the use of technology such as low-orbit satellites.

Philip Jansen, BT’s chief executive, has been vocal in publicly calling for the relaxation of financial and regulatory barriers, or face missing Boris Johnson’s election pledge to deliver full-fibre broadband to most of the country by 2025.

Jansen has previously warned that millions of rural homes in commercially unattractive and costly parts of the country to reach with full-fibre broadband could be the last on the list and become “second class” digital citizens, unless BT was allowed to gain a certain level of commercial benefit from its investment.

“This is good news for all fibre providers in the UK,” Jansen said. “For us, it is the green light we’ve been waiting for to get on and build like fury. Full-fibre broadband will be the foundation of a strong BT for decades to come and a shot in the arm for the UK as we build back better from this pandemic. Connecting the country has never been more vital.”

BT owns Openreach, which controls and is upgrading most of the UK’s broadband network. Other broadband operators, including Sky and TalkTalk, rely on Openreach’s network to provide broadband and telecoms services to customers.

Under Ofcom’s new rules agreed with BT that will apply to Openreach, the wholesale prices it charges other operators for access to the existing 40Mb copper wire broadband network will remain flat. They have dropped 20% in recent years.

However, Openreach will be allowed to charge broadband operators more for services delivered over the new full-fibre network, as part of plans to help BT recoup its huge investment. BT has said this could take up to 20 years.

“These new regulations are intended to boost the pace of the fibre rollout, which has come in for criticism from two parliamentary committees,” said Richard Neudegg, the head of regulation at Uswitch.com. “This does come at a cost though, with Openreach able to continue charging what it likes for its fastest services for at least the next 10 years.”

Ofcom’s new regulations aim to speed up the rollout of next-generation broadband and address the UK’s status as a global laggard in full-fibre.

Only about a fifth of homes have access to it, while many developed countries are beyond 80%, with Openreach sticking to its old copper network instead. Openreach said the new Ofcom regulations will enable it to speed up the rollout of full-fibre broadband, connecting 3m premises a year.

Ofcom has said Openreach can charge broadband providers an additional £1.70 a month for each full-fibre connection to a home or business, which rivals have said could be passed on to consumers.

“Ofcom’s proposals mean blanket price increases for consumers nationwide and yet full fibre won’t be available for the majority for many years to come,” said a spokesperson for TalkTalk. “This approach is at odds with Ofcom’s principal duty to further the interests of consumers and promote competition.”