O2 overshadows BT with superfast broadband rollout

BT's former mobile arm, O2, is challenging the telco in the broadband arena with a rapid rollout of superfast broadband.

BT demerged O2 five years ago to help crack its multi-billion pound debt mountain. Now the mobile operator seems to have BT on the back foot over broadband, which as a fixed network telco should be BT's advantage. While BT is hesitating over the rollout of superfast broadband, known as ADSL2+, O2 is accelerating its own plans.

O2, which acquired pioneering ISP Be earlier this year, said on Wednesday that it is already offering its ADSL2+ service — which has a maximum speed of 24Mbps — to 25 percent of the UK population. And it also confirmed that it would extend coverage to between 50-60 percent of the population by the summer. O2 is currently in negotiations with BT Wholesale over a reseller agreement to cover the rest of the country, but this would be for standard broadband speeds of up to 8Mbps.

Russ Shaw, who is O2's capability and innovation director and who is one of the key senior executives behind Be, told ZDNet UK, "We will have well over 800 local exchanges by next summer. That will cover between 50 percent and 60 percent of the population."

The Be brand will be ditched in the second quarter of next year, Shaw said, to be replaced by a name such as "O2 Broadband".

Be is already a market leader in providing fast downstream speeds in the UK, at 24Mbps. To complement this, it said on Wednesday it would increase its upstream rates for business customers. From 4 December, users on its most expensive tariff, Be Office, will be offered a 2.5Mbps upstream connection along with 24Mbps downstream. Those speeds are dependent on the distance of the customer from their local exchange, and on other factors such as the quality of the copper line. Businesses over two miles from their exchange will probably receive a far inferior performance.

Be has been keen to hype the potential for superfast broadband since it installed equipment in its first telephone exchange last year. But O2 is more cautious. Its chief technical officer Dave Williams said, "Those are the advertised rates. We will be taking a look at them. We need to make it 'very O2' — underpromise and overdeliver."

But O2 will not offer broadband for free, and it dismissed moves by other operators — such as Orange and Carphone Warehouse. "Customers are rebelling against free broadband," said UK managing director Matthew Key. "They associate free with substandard. The best things in life are not free."

Orange has seen disappointing sales figures for its combined mobile-broadband offering. Carphone Warehouse's offer has been far more popular, but the high-street chain has found it hard to deliver.