BT is to offer higher speed wholesale broadband services across the UK, increasing line speeds from a basic 2MBps to a maximum of 8MBps, extending the ability to deliver interactive video services.

The retail arm of BT says it will offer a free upgrade to higher speeds to its 2.3 million broadband customers, provided they agree to a new 12-month contract. The higher speeds will offer increased bandwidth for the broadband video service that the division aims to launch later in the year.

Ian Livingston, chief executive of BT Retail said the company has spent tens of millions of pounds on the broadband television service, and will spend tens of millions more. He says the service is likely to be offered initially to BT broadband customers. The telecommunications company has recently signed deals from Cartoon Network, Endemol and Geographic Channel.

“We intend to lead the way in the development of interactive services,” said Dan Marks, chief executive of TV Services at BT Retail. “Significantly, our next-generation TV service will be offered nationwide and not restricted to metropolitan areas, and customers will not be required to commit to a monthly subscription.”

BT will launch its higher speed broadband services on a wholesale basis from the end of March, although it warns it could take several months for users to be regraded. More than 5,300 exchanges are being upgraded to support the higher speeds, covering more than 99.6 per cent of UK homes and businesses.

For those living or working close to their local telephone exchange, line speeds of up to 8Mbps should be possible. BT estimates that over three quarters of their lines should be able to support broadband at speeds of at least 4Mbps. Around 1.5 to 2Mbps is required for a single stream of standard definition video using the latest digital compression technology.

BT Wholesale chief executive Paul Reynolds said the UK now boasts the highest level of broadband availability among the G8 countries. “We’re now building on those efforts in becoming the first operator in the UK to commit to a national service which is capable of broadband speeds of up to 8Mbps.”

Higher speeds are already available through certain service providers that have installed their own equipment in BT exchanges, mainly in urban areas, but generally available higher speeds will make broadband video streaming and download services a more practical proposition.

Meanwhile, BT is reported to be a takeover target for private equity firms. BT says the reports are “completely speculative”.