BT is to invest a further £1bn in expanding its fibre optic network into homes, streets and offices over the next four years, having already pledged £500m to the upgrade.

The telecoms firm predicts that the investment will allow it to deliver high-speed broadband links of up to 100Mbit/s to 10 million homes by 2012, although the speed users actually receive may be throttled back depending on what rival broadband operators are offering at the time. The fibre optic cabling will allow for speeds of up to 1Gbit/s in the future.

Other telecoms firms, most notably cable provider Virgin Media (formerly NTL), already deliver fibre optic broadband services. But their coverage is limited to specific regions of the country and they do not have the extensive telecommunications backbone that BT maintains to aggregate broadband traffic and help ensure performance.

BT is already trialling 100Mbit/s broadband on a new housing estate and business park in Ebbsfleet, Kent. As with the Ebbsfleet project, the company will rely on assistance with planning and regulation from local and regional authorities to smooth fibre optic delivery. The plan also relies on UK telecommunications watchdog Ofcom revising competition rules, to make sure that BT and its partners can see sufficient profit from their investments.

“This is a bold step by BT and we need others to be bold,” said BT chief executive Ian Livingston.

He called on Ofcom to "remove current barriers to investment and make sure that anyone who invests in fibre can earn a fair rate of return for their shareholders."

BT will test both fibre to the premise (FTTP) and fibre to the cabinet (FTTC), with the latter relying on existing copper telephone wiring and DSL technology to carry traffic from homes to a street-based wiring cabinet.

Broadband rival Sky is also reported to be testing FTTC in east London. As with other broadband technologies that use copper wiring, the speed of the FTTC-based link will depend on how far the user is located from the cabinet, though speeds of 50Mbit/s are possible for anyone resident within 1km.