City-Country Broadband Split to Widen In Britain

A telecommunications firm in Great Britain has received full regulatory permission to build a national fiber-optic network for broadband. It could mean speeds of up to 100 Mbps for those in cities, with rural dwellers left behind.

The company concerned, British Telecom (BT), was once the monopoly provider of phone services in the country. Today it competes with others, but still controls the phone network itself, meaning phone users must either rent a line from BT or use a cable service.

At the moment the fastest cable service belongs to Virgin Cable, which has just launched a premium 50Mbps service. British Telecom, restricted by its copper wire phone network, has been unable to compete with this.

$2.5 Billion Deal

Ofcom, the government regulator which covers Internet provision, has given full backing to British Telecom's plan to spend almost $2.5 billion on a fiber optic network. Unlike the publicly-funded broadband network investment in the recently passed United States fiscal stimulus, Ofcom have not placed any restrictions or conditions on which places BT builds the new network.

Critics say that will widen the gap between city and country. Those in heavily-populated areas will surf at 40Mbps service or higher, while those in newly-built housing developments could get as much as 100Mbps. However, there's no requirement for British Telecom to extend the network to less populated -- and thus less profitable -- rural areas, where users are still stuck with low broadband speeds or even dial-up access. (Source: bbc.co.uk)

Competition Under Question

Ofcom believes the new network will promote competition. Independent Internet providers will be able to rent space on the BT network to provide their own services and will pay the same access rates as BT's own Internet division, though BT will set these charges. (Source: theregister.co.uk)

The announcement creates a tricky political question. Those who believe in the free market will point to British Telecom's status as a private firm with a monopolistic history. Those who believe in government regulation will point to BT's role as the only telecommunications big enough to build such a network, arguing that its broadband expansion should therefore be controlled in the public interest.