BT's chairman told the parliamentary select committee for Culture, Media and Sport on Tuesday that rural areas could be forced to wait between 10 and 20 years before they are offered high-speed Internet services, unless the UK government makes a significant financial contribution.
Sir Christopher Bland insisted that it simply is not economically viable for BT to roll out ADSL to parts of Britain that are sparsely populated -- both today and in the next few years. He blamed the fact that relatively few people are signing up for broadband in areas where it is available.
ADSL is currently available from BT at around 1,000 exchanges -- covering some 60 percent of the population. According to Sir Christopher Bland, if the government is serious about Broadband Britain then it has got to put its wallet where its policies are.
"The government has an important role to play in getting broadband to parts of the UK where -- if it doesn't provide help -- broadband rollout may not be achievable for the next 10 to 20 years," Bland told the select committee, which was taking evidence from companies affected by the forthcoming Communications Bill.
Bland also pointed out that under local-loop unbundling, other telecoms companies could install broadband in any UK local exchange. He claimed that they, like BT, recognise it is not commercially viable in large parts of Britain yet.
BT is already using some public money to subsidise broadband rollout. A £10m project, largely financed by the European Regional Development Council, means that a number of local exchanges in Cornwall will be upgraded to ADSL.
Several members of parliament -- including Julie Kirkbride MP, who represents Bromsgrove in Worcestershire -- appeared unimpressed by Bland's pessimistic forecast. Just moments before Bland's announcement, Kirkbride had predicted that BT would carry out the lion's share of the rollout of broadband infrastructure.
Kirkbride demanded to know how long it would take BT to offer ADSL to all of her constituency, which is quite close to Birmingham. In response, Bland said that one out of six Bromsgrove local exchanges are already broadband-enabled. This means that around 18,000 people could sign up for ADSL but, said Bland, in fact a mere 160 or so have done so.
This low take-up, Bland explained, means that neither BT nor a firm involved in local-loop unbundling are prepared to install ADSL in a more rural location where there are fewer potential customers. "Areas with less than 20,000 homes and businesses linked to a local exchange simply aren't viable for broadband today," he said.
In a later hearing, representatives from Cable & Wireless told the select committee that BT's ownership of the local loop was hampering broadband rollout in the UK. They advised that BT should be referred to the Competition Commission, who -- they predicted -- would rule that BT's retail side should be split from its wholesale division.
BT has insisted on several occasions that it would not be in favour of such a split.
Chris Earnshaw, BT Group engineering director and chief technology officer, told the select committee that BT was working on a number of alternative technologies that could be used to take broadband to rural areas. BT is currently operating satellite broadband services in parts of Scotland and Northern Ireland, and Earnshaw suggested this technology could prove commercially viable in the future.
Cable & Wireless disagreed with this assessment. Tom Phillips, C&W's director of public policy, described satellite broadband as "a complete red herring", which he didn't ever see as a solution that large numbers of customers would pay for. BT's satellite broadband package is expected to cost at least £69.99 +VAT per month, with installation costs of at least £899 +VAT.
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