Millions of households could be stung by higher bills under plans to upgrade Britain’s broadband network.
BT’s network arm, Openreach, yesterday said it could give 10million homes cutting-edge internet connections by the mid-2020s – but only if it was allowed to claw back the costs from customers.
The company said the work was likely to cost between £3bn and £6bn and suggested this should be ‘spread fairly’ across a wide range of customers.
This could mean even those customers who don’t benefit could be asked to foot some of the costs.
Openreach believes the upgrade would bring more reliable internet connections and be necessary to meet demand from future technologies such as driverless cars and ‘smart cities’.
A typical broadband package provided by BT currently gives speeds of up to 17mbps for £29.99 a month. The planned faster cables would be able to provide speeds of 1,000mb (1gbps).
But under the plans, people who choose to receive lower speeds could still be asked to pay more to help fund the nationwide upgrade.
BT’s network arm, Openreach, yesterday said it could give 10million homes cutting-edge internet connections by the mid-2020s – but only if it was allowed to claw back the costs from customers
Clive Selley, Openreach’s chief executive, said the benefits from better broadband ‘could be huge’ but added: ‘We’re under no illusions about the challenges that lie ahead.
‘We need a regulatory environment that encourages investment and we need to agree how the costs of such a huge engineering project can be recovered fairly from all those that stand to benefit.
‘Of course that’s going to be tough, but we need to get into the detail of that now with our customers, with Ofcom and with Government.’
It comes as Openreach is under pressure to invest more in Britain’s broadband network.
The company is responsible for the cables that connect most homes to the phone network and the internet, with providers such as Sky, Vodafone and TalkTalk using them for a fee.
They want Openreach to roll out so-called ‘full fibre’ connections, where modern fibre cables would run all the way into households and offices.
At the moment fibre cables only go as far as street cabinets, with Victorian-era copper cables used for the last stretch to people’s homes.
The proposals put forward yesterday would involve replacing these copper wires with fibre cables.
After consulting with internet providers this summer, Openreach said there was broad support for the work and that it should be part of a major switchover across the UK – which would see the old copper system ‘retired’.
This would mean households would be moved over to the new network after the cables had been installed in their area.
We’re under no illusions about the challenges that lie ahead
Openreach said charging a broader number of customers for the upgrade would allow it to keep price increases lower.
It added: ‘A large-scale [full fibre] network is likely to benefit a broad set of customers over time, so Openreach believes the costs should be spread fairly across a broad customer base to reflect that.’
But it also admitted there were concerns that customers may not be willing to pay more money just to get the same internet speeds through better wires.
Last night an industry source said it could mean ‘prices being raised across the board’.
The source added: ‘The concern is they are already allowed to make lots of excess profit… so where is the incentive to invest? They would be able to set their own timetable.’
Openreach believes the upgrade would bring more reliable internet connections and be necessary to meet demand from future technologies such as driverless cars and ‘smart cities’
Another source said there would need to be guarantees that people ‘would not be forced to upgrade’.
‘There is certainly an argument for moving people over to full fibre but you cannot have a situation where they are forced to pay for something they don’t want,’ the source said.
The plan comes as Openreach is already set for a showdown with the telecoms watchdog, Ofcom, over how much it charges for existing internet services.
The regulator has proposed lowering how much the company can charge for providing the cheapest 40Mbs internet packages.
Openreach has argued against this, saying it will hamper plans to invest in its network.
Sharon White, Ofcom’s chief executive, has told MPs Britain is ‘lagging behind countries that we should not be lagging behind’.