Dundee is to become Scotland's first 'fibre city' offering residents high-speed connectivity and broadband speeds of more than 100Mbps.
Work on the new network will begin early next year and should be available to 55,000 households by 2010.
Technology supplier H20 Networks is already offering a sewer-based broadband service to small, concentrated user communities, including Bath and Aberdeen University.
"Dundee is the most densely populated city in Scotland, but this project will see us bringing connectivity to more remote areas as 'Fibrecity' is an all-inclusive solution," said Elfed Thomas, chief executive at H2O Networks.
"Many households and broadband customers have insufficient connectivity bandwidths because they are attached to legacy networks deployed in the 20th century that just cannot cope with demand."
Meanwhile, rival provider Geo has announced an extension of its fibre network in London, connecting to a data centre on London's South Bank via the London sewer system.
Claiming to offer capacities between 1Gbps and 10Gbps, the new extension builds on the company's existing central London network which connects London Bridge and Southwark Street behind the Tate Modern.
"Geo will continue its aggressive network expansion into the second half of 2008, following last year's successful 20 per cent increase in fibre across our London Green Zone," said Geo sales director Mark Ryder.
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