BT and Virgin Media clash over broadband rollouts

BT says that its fibre rollout will be completed by 2012

BT has defended its decision to spend £1.5bn on fibre rollouts for next-generation broadband networks in areas already covered by Virgin Media.

Tim O'Sullivan, director of public affairs at BT, said he found it " surprising that anyone would suggest that spending £1.5bn on new fibre in the current climate was 'disappointing'".

O'Sullivan was responding to comments from the floor at yesterday's Future of Broadband in the UK eForum event, which described BT's proposed rollout as " defensive" and "disappointing" by trying to compete with Virgin Media's existing infrastructure.

"We are working to ensure that the UK is in a position of strength in the world of high-speed broadband with this commitment to financing the installation of next-generation access to broadband," said O'Sullivan.

Jon James, executive director of broadband at Virgin Media, countered this statement, saying that the people who should be disappointed with the proposed investment are BT's shareholders.

"We already offer high-speed broadband in the areas BT is proposing to move into, and have the capability to introduce speeds in excess of 50Mbit/s for the future as well," James said.

BT is planning to roll out the new fibre to 40 per cent of the population by 2012, around 10 million homes, and to achieve 75 per cent of this target by the spring of 2011.

However, O'Sullivan did admit that there is currently "no commercial case beyond 40 per cent", as the cost of rolling out fibre-to-the-home (FTTH) or fibre-to-the-cabinet (FTTC) rises steeply once levels of 60 or 70 per cent are considered.

Matt Yardley, a partner at research firm Analysys Mason, also talking at the event, underlined these concerns by outlining the cost implications for a nationwide rollout.

"Installing FTTH for two-thirds of the population would cost around £10bn, but to reach the final third it could rise to around £28bn. Similarly, for FTTC it would rise from £2bn at 40 per cent to £5bn for a nationwide rollout," he said.