UK carrier BT is to spend £1.5bn pounds (US$2.99 billion) rolling out super fast broadband to 10 million (or 40 per cent) of UK homes by 2012.

BT said on Tuesday that it would invest in rolling out fibre to the premise (FTTP) for new builds, such as Ebbsfleet in Kent and the Olympic Village, while existing homes and premises would gain fibre to the cabinet (FTTC).

The FTTP deployment will deliver headline speeds of up to 100MB/s, while the FTTP rollout will initially deliver speeds of up to 40MB/s (although BT is investigating ways of ramping this up to 60MB/s).

BT said it is already offering FTTP to 120,000 businesses, and could eventually allow customers to access the web at 1,000MB/s.

More realistically, the carrier said that fibre-based broadband will allow different members of a family to watch multiple high definition movies simultaneously, while others could play online games or download music files. As well as boosting download speeds, fibre-based broadband will significantly increase upstream speeds, meaning customers will be able to post videos more quickly.

However, BT has made clear that the move is dependent on UK telecoms regulator Ofcom, ensuring that there is a proper regulatory framework in place that allows it to get a decent return on the investment.

Ofcom meanwhile has welcomed BT's plans to upgrade its broadband network, which suggests that an agreement is not too far away.

"This is a clear sign that the UK market is moving in the right direction, with a growing number of plans to deliver super-fast broadband services to consumers, said Ed Richards, Ofcom Chief Executive.

The regulator said it would publish further detailed proposals for the regulatory framework for Next Generation Access networks in September.

Analyst Reactions

Meanwhile, BT's announcement has been given a cautious welcome by some industry observers.

"At last, BT has decided to invest in fibre on a large scale. This is great news for the UK, and will remove some of the awkward questions about why are we languishing behind many other nations in the provision of high-speed broadband," said Matt Yardley, partner at Analysys Mason.

"Financially, this is a sensible step for BT, and should not preclude a move to more widespread FTTH in the longer term," he added.

Meanwhile, industry commentator Dean Bubley called BT's plans "a fairly prudent risk-management approach on BT's part given the current economic situation. Sufficiently aggressive to catalyse some regulatory change - and maintain clear water between fixed & mobile broadband - but not large enough to act as a boat anchor on the company as the UK economic falters."

He also said the investment could tie in with BT's entry to the WiMax market. "Depending on what happens in the UK's delayed 2.6GHz auction, it seems reasonable to assume that any future BT deployment of WiMax will also be supported by fibre."