New broadband network will now be built by BT thanks to Ofcom

With Ofcom finally proposing a regulatory regime that will enable BT to profit from the 1.5 billion it is about to invest, it will now get the go-ahead to build its new high-speed broadband network that will provide coverage to 10 million homes throughout Britain.

A new set of rules have now been proposed by Ofcom following weeks of intense negotiations that will include the delivery of broadband speeds that will be 20 times quicker than the average speeds currently available due to a change in the way that BT’s network business Openreach operates.

Rivals will now have access to the new fibre-optic network, which BT will spend the next three years building, on a wholesale basis, but BT has now been promised that it will be able to profit from it under the proposals made by the regulator.

Amidst calls from Lord Stephen carter for action and following over two years of deliberation and consultation the proposals from Ofcom for so-called next generation access networks has now been released. The communications minister made one of his priorities “upgrading and modernising” the UK’s digital networks, in his recent interim Digital Britain report.

Improvements have already been made to Virgin Media’s cable network, meaning speeds of up to 50Mbps are now available to its customers. Rival companies are, however, currently unable to access Virgins network, although the opening of its network is something that Lord Carter has made clear he expects at some point in the future.

Plans to spend £1.5 billion running high-speed fibre optic cabling to its cabinets at the roadside and even connecting the new network to a number of premises directly were outlined last summer by BT. This new network could run 20 times quicker than today’s average broadband connection speeds, which means it could run at speeds of up to 100Mbps.

A number of BT’s shareholders called for management to save the money and put the plans on hold since the recession hit, the problems BT had with a huge writedown in the value of its Global Service consulting business and its pension deficit. It is expected that Ian Livingston, the chief executive of BT will now have the regulatory certainty he requires to argue for the go-ahead of the scheme following the proposals provided by Ofcom.