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Fibre-optic broadband

The delay of Lord Carter’s report into the broadband sector has fuelled fears that plans for a UK-wide fibre wire network have been dramatically scaled down, with the financial problems encountered by BT believed to have influenced the move.

Lord Carter was due to unveil interim findings of his comprehensive look at the state of the broadband market on Friday January 24th. However, this has since been delayed by a month. With no official reason given for the postponement, speculation is now mounting that the study’s recommendations have been overtaken by recent events in the UK broadband sector that have given a clearer picture of how the credit crunch is affecting the area.

According to a report from the Daily Mail, Lord Carter’s recommendations will now focus less than had been anticipated on the need to provide high speed broadband across the country. Instead he will make the rather more modest provision of ensuring that slower speed broadband is available to all via copper wires.

Suggestions that the study will see plans for the next generation network downsized followed BT’s announcement of a second consecutive quarterly profit warning for its Global Services division. BT now expects this unit to record a profit of around £17 million, down from previous forecasts of profit of around £110 million.

BT had been expected to contribute around £1.5 billion of the cost of the next generation network. However, over recent months it has come under pressure from shareholders to stall on committing this funding on the grounds that the company would needs to shore up its cash reserves in the face of the economic downturn.

As well as impacting on the next-gen networks, another consequence of developments at BT it has highlighted the importance of rival providers contributing to the estimated £5.5 billion cost of ensuring that all of the UK has access to current generation broadband by 2012.

In a bid to ensure that the provision of a fibre optic network does not fall entirely by the wayside, the report is expected to call on the government to do all it can to encourage investment by allowing Ofcom to let high speed broadband companies charge prices that will allow them to recoup their money quickly. Also probable is that tax breaks for such firms will be endorsed.

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