The plan calls for BT to gradually abandon its existing Asynchronous Transfer Mode (ATM) network and public switched telephone network (PSTN).
If the project is a success, the company will be able to deliver voice and data services over an IP network that supports multiprotocol label switching, or MPLS. This network will make significantly greater use of fiber-optic connections than today's network. In some cases, fiber will reach as far as the customer's premises, superseding today's legacy copper lines.
"This is a decisive move from narrowband to broadband, and from PSTN to broadband," Paul Reynolds, chief executive of BT Wholesale, said Wednesday at a news conference in London.
"This is the most radical strategy of a telco business you will see anywhere in the world. It's fundamentally based on broadband everywhere," added Reynolds, acknowledging that BT's existing network is not capable of coping with the predicted growth in broadband data services. "We will have a single network running multiple services, not multiple networks running multiple services in a complicated way."
BT plans to begin mass migration from PSTN to IP in 2007. It is starting with a voice over Internet Protocol, or VoIP, trial involving 1,500 customers this year.
Analysts have suggested that VoIP could make a massive hole in the voice revenue enjoyed by telecommunications companies such as BT.
BT, though, is playing down this risk. "Voice over IP is an opportunity, not a threat," said Matt Bross, the company's chief technology officer.
A second trial will investigate fiber-to-the-home, providing telephone and broadband services over fiber to an additional 1,500 customers.
Building the new network will take up most of BT's US$5.5 billion (3 billion pound) annual budget for capital expenditure between 2004 and 2009. Once the project is complete, high-speed data services should be available across the United Kingdom, over both fixed and wireless links. BT calls this access the "broadband dial tone," comparing it to the buzzing noise a fixed-line telephone makes to show that it is functioning.
"With the broadband dial tone, you will be able to plug any IP-based device into the network and it will immediately recognize that the network is up and ready," Reynolds said.
Graeme Wearden of ZDNet UK reported from London.