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• £1.5 billion programme to give up to 10 million homes access to
fibre by 2012
• Plans dependent on regulatory regime and certainty
• Dividend guidance reaffirmed, share buyback suspended from July 31
2008
BT today announced plans to roll out fibre-based, super-fast broadband
to as many as 10 million homes by 2012. The £1.5 billion programme
will deliver a range of services with top speeds of up to 100 Mb/s
with the potential for speeds of more than 1,000 Mb/s in the future.
The investment forms part of BT’s wider strategy of delivering next
generation broadband services nationwide. The UK already has world
leading broadband availability and this investment programme offers
the prospect of joining the world super league for broadband speeds as
well.
BT chief executive Ian Livingston said: “Broadband has boosted the UK
economy and is now an essential part of our customers’ lives. We now
want to make a step-change in broadband provision which will offer
faster speeds than ever before. This marks the beginning of a new
chapter in Britain’s broadband story.
“This is a bold step by BT and we need others to be just as bold. We
are keen to partner with people who share our vision for the next
phase of the broadband revolution. We want to work with local and
regional bodies to decide where and when we should focus the
deployment. Our aim is that urban and rural areas alike will benefit
from our investment”.
A supportive and enduring regulatory environment is essential if this
investment is to take place. Given this, BT will be discussing with
Ofcom the conditions that would be necessary to enable this programme
to progress. These include removing current barriers to investment and
making sure that anyone who chooses to invest in fibre can earn a fair
rate of return for their shareholders.
Fibre-based super-fast broadband will give customers enough speed to
run multiple bandwidth-hungry applications. So, for example, some
members of a family could be watching different high definition movies
while others were gaming or working on complex graphics or video
projects. The new services will also offer substantially improved
“upstream” speeds allowing customers to post videos, use hi-def video
conferencing and enjoy interactive hi-def gaming to the full.
BT already provides fibre to the premises of more than 120,000
businesses, and has deployed more than 10 million kilometres of fibre
in the network.
BT is committed to wholesaling its new services – unlike many other
companies and countries – thereby ensuring Britain remains the most
competitive broadband market in the world. BT will also be pressing
for any other next generation access network in the UK to be open to
other companies.
Financial details
BT plans to invest around £1.5 billion in total on the programme, of
which around £1 billion is incremental to BT’s existing expenditure
plans for fibre deployment.
BT expects its initial investment in the programme will result in
around £100 million of incremental capital expenditure in each of the
2008/09 and 2009/10 financial years, taking the total expected capital
expenditure in those years to around £3.2 billion and £3.1 billion,
respectively. The remaining incremental spend of £800 million will be
spread over the following three financial years.
Given the strategic priority of this planned investment, the Board has
decided it would be appropriate to suspend the current share buyback
programme with effect from July 31, 2008. By that date BT will have
returned in excess of £1.8 billion of the planned £2.5 billion buyback
programme.
The Board of BT remains committed to the dividend and expects to grow
dividends per share in the 2008/09 financial year.
Questions and Answers
What will be delivered? Fibre-to-the-premise (FTTP) or fibre-to-the-
cabinet (FTTC)?
We will deliver both though the exact split will be driven by the
interest shown by government and regional and local authorities. FTTP
deployment will be focused primarily on new build sites such as
Ebbsfleet and the Olympic Village whilst FTTC will be more prevalent
elsewhere.
What speeds will be delivered and where?
FTTP will deliver headline speeds of up to 100Mb whilst FTTC will
initially deliver speeds of up to 40Mb though we are investigating
technologies that can increase those speeds to more than 60Mb. In
addition to the new fibre-based services, copper-based ADSL2+ will
deliver nationwide speeds of up to 24Mb. Recent tests show the
majority of ADSL2+ customers should enjoy speeds of around 10Mb or
above with many getting substantially higher speeds. The technology is
also improving all the time.
Which areas will benefit first from this investment?
BT will work with Government and regional and local authorities on the
roll out plans. They can help ensure there is demand for fibre and so
we look forward to working with them to ensure our roll-out is demand-
driven. Our aim is that both urban and rural areas will be able to
benefit.
Will fibre only be available in large cities as has happened in other
countries?
No. Our aim is that fibre will be widely available and not just in the
major cities – unlike in some countries. Its precise deployment will
depend on the engagement of government and regional and local
authorities but there is no reason why it should not be available in a
variety of environments.
Will the UK be in a stronger position after this deployment?
Yes. This plan will deliver some of the fastest speeds in the world to
a far larger percentage of the population than in some other countries
where fibre services are largely confined to major cities.
What will happen to those parts of the UK who won’t have access to
fibre?
Those areas will have access to copper-based ADSL2+, a service
offering speeds of up to 24Mb. This will be sufficient for services
such as Hi-Definition TV. BT will roll out fibre beyond this plan if
there is sufficient demand and it can make an adequate return on its
investment.
If ADSL2+ offers sufficient speed to enjoy new services, why invest in
fibre?
Copper-based ADSL2+ will offer sufficient speed for services including
HDTV but fibre will allow people to enjoy several such services
simultaneously. It is important everyone is bold in ensuring there is
sufficient capacity for future services and our plans will ensure
this.
Is this investment dependent on Ofcom creating a new regulatory
framework?
Yes. The right regulatory environment is vital for anyone seeking to
invest. The funds required are extremely large and companies need
confidence that risk-taking can be appropriately rewarded.
Will BT exclude other companies in the way companies have in other
countries?
No. BT is totally committed to a wholesale market and so will make its
services available on an equivalent basis to all communications
providers.
Does BT believe that other next generation networks should also be
open?
Yes. BT’s firm belief is that all next generation networks in the UK
should be open as this approach will boost competition and consumers
and businesses will benefit.
What are BT’s plans post this investment?
BT will review its plans on a constant basis. If there is adequate
demand and interest for fibre-based broadband and BT can make an
adequate return, the plans would be extended.
Will fibre-based services be more expensive?
It is likely they will be at the wholesale level but the prices that
consumers and businesses will pay will be determined by the market and
not just BT.
Are “next generation broadband” and “super-fast broadband” the same
thing?
No. “Next generation broadband” refers to the family of new services
that BT will offer. These include fibre-based “super-fast” services –
such as FTTP and FTTC – as well as advanced copper-based fast services
such as ADSL2+.
Is this a good time to invest given the current “credit crunch”?
It is important that we invest for the long-term. This is a bold step
that will ensure businesses and consumers have all the speed they
require in the foreseeable future.
Are you taking action to reduce the congestion caused by services such
as the BBC’s iPlayer?
Yes. BT has made it much cheaper for companies to buy extra capacity
on the “backhaul” pipes that link exchanges to the core network. This
move should ensure Internet congestion is minimised. BT will also
invest significant funds in improving core network capacity. Both
measures should ensure customers on BT’s network will enjoy a higher
quality of service than those on cable networks where contention and
internet congestion has been more of an issue.
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from
http://www.btplc.com/news/articles/s...0-734fac577e94
Regards
Sunil
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