Fujitsu takes on BT over rural fibre

Fujitsu is set to compete with BT for Government subsidies as it prepares a £2bn roll out of superfast broadband infrastructure to households in rural areas.

The Japanese technology group yesterday announced it had the backing of Virgin Media, TalkTalk and Cisco as it sought to build a fibre network in the UK.

The plan hinges on Fujitsu gaining some access to the £530m earmarked by the Government to drive superfast broadband investment in rural communities.

Culture Minister Jeremy Hunt has pledged that the UK will have the best superfast broadband infrastructure in Europe by the end of the current parliament.

Fujitsu is targeting the "final third" where so far companies have found it uneconomic to build superfast broadband infrastructure. Robin Bienenstock, senior analyst at Bernstein Research, believes it will happen, and the move represents a "fundamental threat to BT's retail business" in rural areas. She added that after the network was built, BT revenues would likely fall 6 per cent.

This comes shortly after companies including those behind this broadband plan wrote a letter to Communications Minister Ed Vaizey saying BT's wholesale prices were too high.

The minister said yesterday that he was delighted with Fujitsu's proposal. "The collaboration between these companies was exactly the sort of ambition and innovation the Government wanted to stimulate," he added.