BT Pitches $788 Million Plan for Faster U.K. Rural Broadband

(Bloomberg) -- BT Group Plc is proposing a 600 million-pound ($788 million) plan to bring faster Internet coverage to the rural U.K., to be paid for by charges to other broadband users.

The former phone monopoly’s Openreach wholesale division by 2020 would build connections enabling broadband download speeds of at least 10 megabits per second for almost all of the remaining 5 percent of the population that doesn’t currently have them, according to a government statement on Sunday. That level of service would allow a family to stream high-definition TV shows and movies, video conference and surf the web simultaneously.

The proposal follows months of talks between BT and the government over how to implement a universal service obligation pledged by Prime Minister Theresa May’s Conservatives. U.K. politicians with rural constituencies in places like the Scottish Highlands are under pressure to boost broadband service. BT’s rivals that use its fixed network, the nation’s largest, to deliver Internet and landline phone services also complain it doesn’t have enough of the full-fiber lines capable of delivering the fastest speeds.

The government said the voluntary plan would be delivered more quickly than an approach through regulation, though it will consider both. The idea of spreading costs for the plan among Openreach’s customers will be considered in an ongoing review about wholesale rates by communications regulator Ofcom, the government said.

“We warmly welcome BT’s offer and now will look at whether this or a regulatory approach works better for homes and businesses,” Culture Secretary Karen Bradley said in the statement. “The driving force behind our decision making will be making sure we get the best deal for consumers.”

Linking rural broadband to the other wholesale review may be seen by some of BT’s rivals as a quid pro quo regarding an already contentious topic that has divided the telecommunications industry. BT is fighting a rate cut proposed by Ofcom in March for one of Openreach’s Internet products, arguing it would discourage investment in faster services just as Openreach tries to advance a proposal for more full-fiber broadband. Liberty Global Plc’s Virgin Media has sided with BT, while Sky Plc and TalkTalk Telecom Group Plc say cutting rates will attract more customers to higher-speed services.

TalkTalk has warned against socializing the costs of any rural broadband plan only on the Openreach network, proposing that a wider industry fund would be a cheaper, fairer and more transparent way to deliver it.

The rural broadband plan from BT would consider a range of technologies, including laying fiber to street cabinets and all the way to buildings, as well as fixed wireless solutions. Fixed coverage would be the priority and BT expects to complete the roll-out by 2021 or 2022. About 99 percent of U.K. buildings could have access to at least 10 megabits per second download speeds by 2020, according to BT’s proposal.

To contact the reporter on this story: Rebecca Penty in London at rpenty@bloomberg.net.

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Brian Wingfield, Niveditha Ravi