BT is to install fibre-based, super-fast broadband to around 10 million UK homes by 2012.

The £1.5bn programme will deliver a range of services using fibre optic cables with top speeds of up to 100Mbits/sec but which have the potential to reach speeds of more than 1,000Mbits/sec in future.

These speeds are seen as vital to boost the UK economy and ensure that multiple bandwidth-hungry applications, such as high-definition TV (HDTV) and computer gaming, can be run simultaneously.

The investment forms part of BT’s wider strategy of delivering next-generation broadband services nationwide and will not be confined to major cities. BT said it plans to include urban and rural areas in the project, and will also make its services available on an equivalent basis to all communications providers.

Ian Livingston, BT’s chief executive, said: “We now want to make a step-change in broadband provision which will offer faster speeds than ever before. This marks the beginning of a new chapter in Britain’s broadband story. "

BT’s announcement helps answer calls from Government and the UK broadband sector to start installing the infrastructure needed to join the world's super league of countries for broadband speeds, such as Korea, Japan and Sweden.

The telecom giant will use two ways of delivering next-generation broadband. In primarily new building developments it will use fibre to the premises (FTTP), where the cable goes directly into the home, delivering headline speeds of up to 100Mbits/sec.

The second technology is fibre to the cabinet (FTTC), where the cable goes to a street cabinet that serves several customers via co-axial cable. This will initially deliver speeds of up to 40Mbits/sec.

BT is not abandoning ADSL technologies, however. Those areas that won’t have access to fibre will have access to copper-based ADSL2+. BT said this technology would be sufficient for standalone services such as HDTV. It will roll out fibre beyond this plan if there is sufficient demand and it can make an adequate return on its investment.

BT also pointed out that the right regulatory regime is vital as the investment funds required are enormous. Ofcom welcomed BT’s announcement and said it was already working with BT and others to ensure the right regulatory environment to support investment and competition.