Return on Investment

However questions marks still remain, especially over BT's insistence that the regulator ensures a fair return on investment and a proper regulatory framework.

"The regulations surrounding universal access for example need to be updated," a BT spokesman told Techworld. "The regulations currently say that BT has to install a copper line into every home, which would be pointless if we were to install a fibre connection instead."

"And yes, we are looking for a reasonable rate of return," he added. "Of course, the devil is in the detail." When asked who would decide on what is a fair rate of return, the spokesman said that BT would likely suggest a number, Ofcom would suggest a number, and they would agree somewhere in the middle.

He pointed out that Openreach is allowed to make a 10 per cent return, but as BT deems this a more risky investment, it would want "something more than that." BT said it had already earmarked £500 million (US$999 million) for the fibre investment, and today's investment is an additional £1 billion (US$1.99 billion) on top of that.

Point of principle

And BT also expects others to play fair as well, as it will open the fibre network for others to use by offering a wholesale service.

"As a principal, all these networks should be open," said the spokesman, "We believe in wholesale, as a point of principle." He said that if Virgin Media uses BT's fibre network, then it would only be fair for it to allow BT to also use Virgin Media's network to reach customers.

The spokesman pointed to previous problems with fibre rollouts in other European countries, citing Germany, where Deutsche Telekom (DT) was controversially granted a 'regulatory holiday' for three years by the German regulator, in return for building a high speed fibre network connecting 50 German cities.

DT banned competitors from accessing its new high speed network, incurring the wrath of the European telecoms commissioner, Viviane Reding.

So who will get it?

In the UK, BT says it aims to make fibre widely available, and not just in the major cities. "We want to work with local and regional bodies to decide where and when we should focus the deployment," said BT boss Ian Livingston. "Our aim is that urban and rural areas alike will benefit from our investment."

The precise deployment of the fibre network is currently unclear then, and will depend on the engagement of government and regional and local authorities.

"It all depends on the reaction of local authorities," confirmed the spokesman. "If for example, a hospital in Devon asked for it, as it would help them with their ability to improve medical care, we will look at it. BT will look at deployment into non fibre areas on a case by case basis."

For the remaining 60 per cent of the UK population, they will have to be satisfied with ASDL2+, which promises speeds of 24MB/s (although in reality this will be closer to speeds of 10MB/s upwards). This news in essence confirms Techworld's predictions that the UK will end up with a two tier broadband system in future.

Yet, BT said that we can expect regional announcements over the next couple of years as rollout plans are finalised. "This is a first step," said BT. "This (£1.5 billion) is what we will invest over the next four years. If people want more, we may invest more."