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BT's £1.5bn "super-fast broadband" plans have been given a warm welcome by Ofcom and others looking for signs of movement towards next generation networks.
A notably different response came from Virgin Media, though, which faces a threat to the claimed superiority of its fibre and coaxial cable infrastructure. The company, keen to appear unshaken, issued an official reaction noting that it still had a clear head start on capacity.
"As demand for online content and services grows, BT's announcement endorses Virgin Media's long-held view that super-fast broadband is what people want," said a statement. "Virgin is spearheading this roll-out by bringing a cutting edge 50Mb broadband service to some 12m homes across the UK between now and the middle of 2009."
Seeking to downplay any fanfare over BT's willingness to pump an additional £1bn into fibre, Virgin estimated that its predecessors in the UK cable industry had spent, in today's terms, around £13bn on laying their networks.
More recently, Virgin has been spending about £150m per quarter on infrastructure, in part to rollout the DOCSIS 3.0-equipped hardware required for its "up to 50Mbps" broadband. BT's expected capital spend for 2008/9 and 2009/10 is now £3.2bn and £3.1bn respectively, followed £800m over the succeeding three years.
The telco, which has accepted other providers will be using its network on a wholesale basis, also today called for "any other next generation access network in the UK to be open to other companies" - a likely reference, and another potential threat, to Virgin.
"We strongly support BT's call for a stable regulatory environment that rewards both current and future investment," the cableco said in a carefully worded reference. "We will continue working closely with Ofcom and the government to achieve this."
BT's plans could have been worse for Virgin, though, which has previously claimed it is ready to increase broadband speeds to 100Mbps when competition demands it. Extending fibre to premises around much of the UK, which would present a more solid commercial challenge to what Virgin can provide, would cost at least £10bn. Several analysts have noted Virgin still has the advantage in the short term.
It is worth noting that Sky and Carphone Warehouse, who have both spent millions on unbundling BT exchanges for their own use, could also suffer if their networks become outdated.
Several Digital Spy forum members shared some of Virgin's cynicism about the plans.
"BT is only investing £1.5bn into this and estimates suggest it will take £15 billion to fibre up the whole country," said Horizon, posing from outer London. "I wonder where the other £13.5bn quid will come from." Dykeolicous added: "I don't think I will be holding my breath on this happening tbh."
Consumer advocates, including Michael Phillips from price comparison website Broadband Choices, agreed it remained to be seen what BT's investment would produce. "Will 100Mb really mean 100Mb when it is finally delivered?" he asked.
Ofcom took the opportunity to confirm it would be establishing regulations for NGA in coming months. "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 chief executive Ed Richards.
The regulator was looking "to provide the right incentives for operators to invest, recognising the inherently risky nature of these investments," he added - but exactly how much risk BT is prepared to take may still become a sticking point.
By putting its £1.5bn "offer" on the table, BT has pre-empted Ofcom, piling on pressure to meet its regulatory provisos. The Broadband Stakeholder Group, which represents officials as well as the communications industry, recommended just last month that the UK wait three to five years before investing.
"There has been a question mark hanging over the UK telecoms sector for the last 18 months about how we move to next generation broadband," said BSG chief executive Antony Walker. "(Yesterday's) announcement is by no means the whole answer, there are still questions about the regulatory framework and how we extend services to more rural areas, but it is a very significant step forward."
