By Jane Wakefield
Technology reporter, BBC News
Broadband has been a huge success in the UK with more than half of all UK homes with a connection, at an average speed of four megabits a second (Mbps). But there are fears that the country is being left behind in the push towards next-generation networks.
The UK's current broadband network is predominantly based on copper wires designed for telephone calls, and in the coming years the hardware will reach its technological limits, putting a cap of 24Mbps download speeds on connections.
The technology, called ADSL, also suffers from issues such as falling speeds with greater distance from the exchange, noise on the line, limited upload speeds and slowdown when more people are on the network.
A future download speed of 24Mbps might sound fast, but other countries around the world are offering 40Mbps and even 100Mbps connections right now.
An extensive network of fibre optic cables has been touted as one solution but a UK-wide fibre to the home plan would cost £15bn to roll-out and some in the industry question the financial wisdom of such a network and whether it is needed at all.
BT, which operates the ADSL network in the UK, has said it would need government assistance or commercial incentives before it could commit to building a next-generation network.
The UK's sole cable provider, Virgin Media, is in the process of boosting its network in order to offer speeds of up to 50Mbps to 52% of the UK by the end of 2008.
Without proper investment in next-generation broadband, users in the UK could miss out on the internet's next major innovation, said Ian Fogg, an analyst at Jupiter Research.
"The next big thing on the internet - 2010's YouTube - may not work in the UK," he warned.
One of the biggest issues is that no-one is really sure what "the next big thing" will be. Even if the UK did have a next-generation network ready to be switched on, how would it be used?
In the US, fibre to the home networks are being used to deliver High Definition TV services but in the UK Sky and cable firms already offer HD programming, with Freeview earmarked for hi-def content in the next five years.
Others think that even if people did want high definition content delivered via broadband, they would not want to pay for it.
"The question is how to make money and I'm not sure the answer is good. Take HD, people have already paid out £2,000 for a plasma TV and they see that as paying for HD. They are not going to want to pay for the service as well," said Justin Paul, a development manager at telecoms equipment firm Alcatel-Lucent.
The faster upload speeds offered by fibre could spur community networks that create and share video content and more bandwidth is always appreciated by online gamers.
But gaming is not going to be enough in itself to recoup the costs of either upgrading cable or investing the estimated £15bn needed.
A nationwide fibre roll-out would cost less than CrossRail
One of the biggest issues facing the industry is how to make sure that any future fibre network was open to all internet service providers (ISPs) to use.
It has taken a long time for this to become a reality on the copper network. BT has offered wholesale products to ISPs for a long time, and Ofcom would require this to continue on any new network, but many think real competition only began with the introduction of local loop unbundling.
Local loop unbundling allowed other operators to put their equipment in telephone exchanges but it has been an extremely long and arduous process.
"The process started in 2000 but didn't really start to work until 2006," pointed out Andrew Heaney, director of strategy and regulation at Carphone Warehouse.
Even now rival operators feel they are not getting their hands on enough of the network and are campaigning for greater access to BT's core network.
"In France, Italy and Holland I can buy fibre to the exchange. I can't buy that in the UK," said Simon Gunter, head of strategy at UK ISP Tiscali.
In a fibre world it would be essential to have the same number of players as the current broadband market.
But the new way of unbundling - known as sub-loop unbundling - is even more fraught with problems. It would require operators to share space in tiny street cabinets which some think is unfeasible.
There are worries that laying fibre would re-open digital divide
Some believe there is now a case for Virgin Media - the UK's only cable operator - to offer its products on a wholesale basis. Ofcom does not require it to do so because it is not regarded as having sufficient market dominance.
There are also concerns that a fibre network would create another, wider digital divide with cities and towns well-served by fast networks while inhabitants outside large conurbations languish on much slower speeds.
Fill-in solutions, such as long-distance wireless system Wimax, would play a part as would community-generated schemes but even Ofcom admits that some level of government funding would be necessary to reach the UK's most remote areas.
Some think the government should go further and fund the whole project.
"You have to put the spend in context. The government is prepared to pay £16bn for CrossRail, a project that will benefit just London. A fibre network will cost £15bn and benefit the entire nation," said CarPhone Warehouse's Heaney.
Mr Gunter pointed out there was another option.
"Do nothing is still an option. Virgin has been gifted a next generation network and they seem to be finding it hard to find the services for it. Imagine that with a £15bn debt against it," he said.
And he added, there are still plenty of problems to be sorted out with existing broadband services.
Issues such as how easy it is for people to migrate to other providers, and the huge gap between advertised speeds and speeds people are actually getting, remain a sticking point for consumers.
"Perhaps it isn't the wisest idea to move on to the next bright shiny new project without fixing this-generation issues," he said.