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BT threatens to pull plug on better broadband

Piling pressure on Ofcom

The smart choice: opportunity from uncertainty

Cash-strapped BT has identified a vogueish fillip in its lobbying campaign for a looser regime to regulate access to forthcoming next-generation fibre deployments: the recession.

For several months BT has been pushing the line that Ofcom will have to give it more control over wholesale access and pricing to make investments in fibre worthwhile. Now chief executive Ian Livingstone has issued a threat that even the £1.5bn so far allocated might be imperilled by the economic climate if regulators don't play ball.

Estimates say a nationwide fibre network would cost up to £29bn.

Livingstone was quoted in The Guardian on Friday warning that some mean shareholders might not let him spend the money. "But I have to tell you there are some shareholders who say 'you know something, don't do that, don't do a whole lot of other things. That leaves you with a lot more cash and cash today is worth a lot more than cash in a few years' time'," he said.

If Ofcom would just see things his way, Livingstone suggested, he could persuade nervous shareholders that splurging billions on digging up roads is a good idea, despite the recession and BT's own particular financial problems. "I personally believe if it is the right thing to do as a 20-year decision it is the right thing to do," he said. "But we need to have the environment in which our shareholders feel there is a good chance of us making a return."

The implicit threat is "let us run things how we want to, or we might not bother at all". So far BT has committed only to fibre to the premises at the new Ebbsfleet development in Kent, and announced two 10,000-customer pilots of fibre to the cabinet in London and Wales.

The government's Caio Report on next generation internet infrastructure investment recommended that public money shouldn't be used, making Ofcom more likely to take BT's threat seriously. Its effect will only become clear when the regulatory framework is made public next year. Ofcom's consultation closes in December. ®

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