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The company claims that as many as 10 million homes will have access to the fibre network by 2012.

However, the majority of the fibre network will be based on fibre-to-the-cabinet (FTTC) rather than the higher speed fibre-to-the-premises (FTTP - often referred to as fibre-to-the-home). This means the vast majority will be restricted to speeds of up to 40Mb/sec, rather than the 100Mb/sec maximum offered by FTTP.

BT says the FTTP will still largely be restricted to new builds, such as the current trial underway in Ebbsfleet and the forthcoming Olympic Village.

The telecoms giant claims the investment is also dependent on "a supportive and enduring regulatory environment", although Ofcom has given BT every encouragement that it will take a light approach to fibre regulation.

"Broadband has boosted the UK economy and is now an essential part of our customers' lives," says BT chief executive, Ian Livingston. "We now want to make a step-change in broadband

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provision which will offer faster speeds than ever before. This marks the beginning of a new chapter in Britain's broadband story.

"This is a bold step by BT and we need others to be just as bold," Livingston adds, in a clear signal to Ofcom. "We are keen to partner with people who share our vision for the next phase of the broadband revolution. We want to work with local and regional bodies to decide where and when we should focus the deployment. Our aim is that urban and rural areas alike will benefit from our investment."

Who gets fibre first?

BT says the fibre rollout won't be restricted to major cities, although the financial returns of deploying in well-populated areas makes it almost inevitable that urban areas will benefit most.

The company hasn't revealed which areas will receive fibre first. "BT will work with government and regional and local authorities on the rollout plans," it claims. "They can help ensure there is demand for fibre and so we look forward to working with them to ensure our rollout is demand-driven."

Of the £1.5 billion being spent, only £1 billion is new money. Previous estimates have claimed it would cost somewhere between £10 billion to £15 billion to bring FTTP to the entire nation.

BT says it's restructuring its financial plans as a result of this investment. "Given the strategic priority of this planned investment, the Board has decided it would be appropriate to suspend the current share buyback programme with effect from 31 July 2008," the company claims. "By that date BT will have returned in excess of £1.8 billion of the planned £2.5 billion buyback programme."