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Industry observers welcome BT's universal broadband proposal in UK

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Industry observers welcome BT's universal broadband proposal in UK

Industry observers welcomed British Telecom's pitch for universal high-speed broadband coverage in the United Kingdom, calling it a "good deal" for consumers.

The telecoms giant recently announced proposals to provide 99% of U.K. premises with broadband speeds of at least 10 megabits per second by 2020.

"The deal suggests that the protracted process of delivering remotely fit for purpose broadband across the U.K. may be nearing completion," according to Alex Blowers, head of regulatory affairs at CityFibre, a U.K. internet service provider listed on the Alternative Investment Market.

BT said it would invest up to £600 million for universal coverage, which would predominantly be delivered by Openreach, BT's spun-off network business.

"Anything that results in better roll-out is helpful; it's a good deal as far as the U.K. is concerned," according to William Webb, former director at British regulator Ofcom and these days CEO of Weightless SIG, a nonprofit standards body focused on internet-of-things connectivity.

Webb added that "100% would be better than 99%," but acknowledged that there are remote locations where it "does not make sense" to build fiber or cable infrastructure.

BT's offer was made public during the British government's launch, on July 30, of a consultation regarding a universal service obligation (USO), intended to give remote households the right to broadband speeds of at least 10Mbps.

Regulator Ofcom estimates that approximately 1.4 million households still do not have access to 10 Mbps internet speed.

"That is the speed that will meet the typical needs of a family for them to be able to stream films, carry out video conferencing and browse the web at the same time," British Culture Secretary Karen Bradley said in a statement.

Bradley added the U.K. government would consider whether BT's offer or a regulatory approach would work better for homes and businesses.

Observers also argued that the lack of broadband rivalry in rural areas does mean BT's proposals may have limited impact on the market's competitive dynamics.

"There is little underlying competition in broadband supply outside of urban areas," Webb pointed out. "What BT are doing is providing broadband to people who did not have any at all. So it is not changing the competitive environment," he explained.

Either way, it remains "difficult" with markets such as fixed broadband to ensure "proper competition," he added, pointing out that the economics of having two or three different pipes to the home are weak, except in the "densest of areas."

Blowers agreed that the economics of rolling out networks in rural areas are "challenging," but he did stress the importance of being open to new solutions for the hardest-to-reach parts of Britain.

The government separately announced an aspiration to see full fiber networks rolled out to 10 million homes, and such a scheme would offer connections "up to a hundred times faster" than what BT is offering, Blowers said.

He pointed out that it is unclear from BT's announcement "how much of its planned investment will go into building genuinely future-proof full fiber networks."

CityFibre estimates that less than 3% of British buildings have direct fiber connections, compared with 83% in Spain.

As such, Blowers said the government and the regulator should be monitoring BT's plans to ensure that innovative rural broadband networks are not suppressed by BT's proposals.