Openreach, BT’s network subsidiary, is approaching a deal with the Government to produce broadband upgrades to more than a million rural houses and take them up to speed with the majority of the nation.
Openreach is in advanced discussions over an agreement to pay hundreds of millions of pounds to reach a new Universal Service Obligation (USO) created to guarantee no places get less than ten megabits per second. About 5 percent, or 1.4 million, cannot receive a decent basic service according to Ofcom.
Openreach chief executive Clive Selley said, “I hope that we make decisions really quickly now.”
He additionally said. “I want to deliver decent broadband to all of the UK. It’s not like it’s their agenda and not mine.”
Openreach, which is in the process of being legally parted from BT, intends to use new technology to upgrade speeds for rural areas found far away from their local exchange. Mr Selley said that if an agreement is struck over pricing, Openreach could extend the technology to around 1.1 million areas, most of these would end up with a lightning fast speed of higher than 24 megabits per second. The rest would have to rely on satellite and wireless systems.
Openreach is proposing to make the investment without aid, in exchange for certainty that it will return its costs over time via improved pricing. The general election and the weakening of the Government strengthened its hand. Meanwhile, ministers have assured results by 2020.
Openreach appears to the end of a separate, subsidised purchase to give lightning fast broadband to 95 percent of the country. The new projects represent an additional call on BT’s cash flow. It has lowered its dividend growth estimates, but shareholders have advised there must be no more serious blows.