A new national fibre optic network could fuel demand for bandwidth-hungry applications such as videoconferencing, VoIP and internet television, which struggle to run efficiently on existing copper-based broadband infrastructure.
BT is investing £1.5bn in a fibre optic network that will deliver download speeds of 100mbps to UK broadband users. The move follows increasing competition, particularly from Virgin Media, which plans to introduce a 50mbps broadband service in September.
BT aims to put 10 million homes on the fibre network by 2012. To control costs, the network will be built in two parts. One million new-build homes will receive the fibre network directly. For the remaining nine million residents BT plans to replace the copper cabling that connects kerbside cabinets in streets to the local BT exchange with fibre optic cabling.
There is one important caveat. BT will build the network only where there is demonstrable demand from broadband users.
BT says it will work with regional development agencies and local authorities to identify demand. This could mean the network is limited to areas with large populations of broadband users.
David Harrington, head of regulation at Communications Management Association (CMA) warns that BT may simply not have a business driver to connect less populated regions. But for those people who can get it, fibre will enable new internet applications.
Peter Scargill, chairman of the national IT committee at the Federation of Small Business welcomes BT's fibre optic network plan. "Today small businesses use multiple computers - and increasingly, VoIP phones and services such as Skype - all of which need some of the available bandwidth. As more of these services become attractive to use, we will need more bandwidth."
Bandwidth-hungry video applications would also benefit, says Carl Bate, UK chief technology officer at professional services firm Capgemini. "The BT fibre optic network presents some intriguing possibilities for major corporates and government departments to mass-enable a new generation of teleworkers," he says.
People will inevitably find a use for the extra bandwidth promised on BT's fibre optic network. Videoconferencing, video-based training and teleworking could all benefit from faster bandwidth.
Advertising agencies and media companies are already pushing the limits of today's available bandwidth. Jeremy Beale, head of knowledge economy at the Confederation of British Industry, urges retailers to look at how they too can utilise faster broadband to sell value added services.
Richard Steel, chairman of local government IT managers group Socitim, is one local government IT director keen to see what BT can offer. "In the past, we have had some issues because network companies only want to invest in areas where there is quick payback, which tend not to be those we need them in."
Since BT is only building the network where there will be customer demand, some UK broadband users may find they are second-class citizens on the next-generation UK internet, denied access to BT's fast fibre optic network because their location is regarded as not commercially viable for connection.
According to the latest research from the Broadband Stakeholders Group, copper wiring, used in ADSL2+, can offer internet users a data upload speed of only 0.7mbps, even though the downlink can transfer data up to 24mbps.
"This means that some applications like the BBC iPlayer [for downloading TV programmes] need to be written to support lower bandwidth. Fibre supports 20mbps in both directions," says Antony Walker, chief executive of the Broadband Stakeholders Group.