BT has confirmed plans to spend £12 billion rolling out full-fibre broadband to 20 million homes in the UK no later than the end of the decade, following the publication of new rules by Ofcom.
A long-awaited decision by the regulator will allow BT to secure the returns on investment bosses had been hoping for and provide clarity over pricing for the next 10 years, the company added.
Officials at BT hoped the £12 billion investment would allow them to make a profit margin of 12% and, although Ofcom did not specify a percentage, the company said the rules would allow the rollout to begin.
Philip Jansen, chief executive of BT, said: “This is good news for all fibre providers in the UK.
“For us, it is the green light we’ve been waiting for to get on and build like fury.
“Full-fibre broadband will be the foundation of a strong BT for decades to come and a shot in the arm for the UK as we build back better from this pandemic.”
BT’s wholesale division, Openreach, will see no regulation or price caps on its new fibre services but will be able to increase prices on its older copper networks in line with inflation for the next 10 years.
The increase in costs on the older networks will encourage customers to switch to the new full-fibre services and the extra cash will go towards the rollout and get investors the returns they were expecting.
Clive Selley, Openreach chief, said: “We’ve now passed almost 4.5 million premises and are building faster, at lower cost and higher quality than anyone else in the UK.
“Today’s regulation will allow us to ramp up to three million premises per year providing vital next generation connectivity for homes and business right across the UK.”
Ofcom said the approach will lead to properties in around 70% of the UK having a choice of networks from competitive commercial rollout.
The Government plans to cover 20% of the country through public funding to help ensure nobody gets left behind, the regulator added.
Oliver Dowden, Secretary of State for Digital, Culture, Media and Sport, said Project Gigabit will be published on Friday with more details, including the first places to benefit from the £5 billion investment.
He added: “We welcome the regulations Ofcom have announced today, which strike the right balance between encouraging commercial investment and protecting consumers.”
Openreach has said it will deploy full fibre to the remaining 10% of homes, which are typically in rural areas and are unlikely to have access to competitors.
Dame Melanie Dawes, Ofcom chief executive, said: “Over the past year, being connected has never mattered more. But millions of homes are still using the copper lines that were first laid over 100 years ago.
“Now it’s time to ramp up the rollout of better broadband across the UK. We’re playing our part – setting the right conditions for companies to step up and invest in the country’s full-fibre future.”
The plans were broadly welcomed by the industry as a step towards ensuring the UK’s broadband speeds improve without costing consumers more.
Lutz Schuler, Virgin Media chief executive, said: “Ofcom’s focus is in the right place, and we urge the regulator to maintain this trajectory so that more of the country can benefit from competing gigabit networks that deliver long-lasting economic, societal and environmental benefits.”
Greg Mesch, boss at CityFibre, said: “This regulation will promote and protect the infrastructure competition that is enabling Britain to go full speed ahead for full fibre.”