BT has announced an upgrade of its standard broadband offering to 2Mbs and says that it is planning to launch a video-on-demand service, but not until late 2005 or early 2006.

The UK telephone operator says that it will now offer 2Mbs as standard for broadband services and will start to upgrade the majority of existing customers where their line quality permits. BT said it now believes 2Mbs should be the minimum broadband speed, paving the way for new services such as video.

“The internet is no longer simply about surfing the web or checking email,” said Ian Livingston, the new chief executive of BT Retail. He observed that people were increasingly using broadband for online gaming, on-demand music and video.

“BT is bringing applications of the future – such as video telephony – within reach of all our customers today.”

In his first week in his new job, the former group finance director responded to questions from analysts at the presentation of BT’s quarterly results, which showed a 35% increase in ‘new wave’ earnings from broadband and information technology services while income from telephone calls fell.

He said that it was well known that BT is working on a video-on-demand proposition: “I have it in my house so I can confirm that it works, but it’s very early days. I think that we’ll be aiming for late this year but more likely even early next year in terms of launching that properly.”

“I must stress that it’s about video on demand, it’s about interactivity,” he emphasised, adding that it would not be about broadcast TV “because we think that’s done rather well by existing players in the marketplace.”

Asked about the next generation of broadband services, he said that the standard 2Mbs service that had been announced was adequate for a lot of services, including video telephony and “a number of other interactive services we can provide”.

He added that they would also be testing services up to 8Mbs in the autumn and would be looking at ADSL2+ technology, which can offer 18Mbs, but suggested that “we can do most of the things we want to do on 2Mbs”.

Ian Livingston noted that “The UK is different from other markets because we have the most advanced digital terrestrial television and the most advanced interactive satellite provider in the world.” As a result, he suggested that changed the economics in comparison with other countries such as France or Italy.

He concluded by saying that “You have to start from what’s in it for the consumer, not what will the technology do. I know its very non-telco speak, but we’re trying our best.”

BT Group chief executive Ben Verwaayen spoke of the 21st Century Network, BT’s plan for a new infrastructure based on internet protocols: “I think the big change you will see is that it will allow other people to create new services and mount them on top of an open platform environment. I think it will open creativity because it’s all IP, it’s pretty simple to integrate in total different business models.”

Re-iterating that BT was not currently interested in delivering broadcast television services, he said “We talk about innovation not duplication. It’s much more interesting for us to look at what we can do to differentiate by innovation.”