Communications minister Lord Carter has pledged to deliver 2mbps broadband to every UK home by 2012.
The interim Digital Britain report, published today, outlines a wide-ranging 22-point action plan that examines both broadcasting and the UK's digital infrastructure.
"We are developing plans to move towards a historic universal service commitment for broadband and digital services to include options up to 2 Megabits per second, building on the approach to postal services and telephone services in centuries past," media secretary Andy Burnham told the House of Commons.
Currently, telecoms firms are only obliged to provide lines that can handle 28.8kbps. At 2Mbps lines will be capable of handling much more video and sites that offer much greater interactivity.
But the report did not provide definitive answers on how the promise, called the Universal Service Commitment, would be funded. Carter suggested scrapping BT's obligation to solely provide the required investment. Instead the cost burden would be shared by all industry players, including Sky and Virgin, as well as mobile phone operators, broadcasters and web content owners.
"The case for significant extra costs to fall on BT Group alone is a weak one. We expect that the costs of a future universal service commitment could be shared more widely, as it is in other countries, between a range of communications providers, and those who provide communication services over the network," the report stated.
"The contribution could be financial or in kind -- for example, if the mobile network operators continued to build out their networks towards near-universal coverage, facilitated by the acquisition of additional wireless radio spectrum discussed earlier."
By the time of the final report, ir will be known whether internet service providers (ISPs) can be relied on to build next generation networks themselves or if government help will be needed.
Carter's report also emphasised the importance of the internet and communications sector, which "underpins" the UK's economy. "The UK's digital economy accounts for around 8 percent of GDP. It has been one of the fastest growing successes of the past decade."
The report stated: "Our take up of first generation broadband has grown faster than that of almost all the other major economies. Britain has the highest proportion of internet advertising of any developed economy. By 2012, £1 in every £5 all of new commerce in this country will be online."
In July 2008, BT announced plans to invest £1.5 billion in Next Generation Access networks over five years, of which £1 billion was incremental to planned investment. The telecoms group promised delivery of download speeds of up to 40Mb/s to 10 million homes by 2010.
Despite a dire profit warning, BT reiterated its commitment to its broadband fibre roll-out plans. But the deal is contingent on what favourable conditions are offered by regulator, Ofcom, such as the rate of return on capital and rules on network access for BT’s competitors.