Telecoms companies will have to foot the bill, expected to run to billions of pounds, for the next generation of super-fast broadband across the UK, according to the former boss of Cable & Wireless, who was asked by the Government to review the British broadband market.

Francesco Caio, vice chairman of Lehman Brothers in Europe, who led the review into the future of broadband for the Department for Business, Enterprise and Regulatory Reform and the Treasury, said the Government must not be “complacent” about the next generation roll out but that a case for state subsidy was “weak at best”.

Mr Caio suggested recommendations In the report, published today, that included ways in which the Government can help to reduce the bill, estimated at between £5.1 billion and £28.8 billion, for installing the high-speed fibre optic lines.

Warning of the logistical “nightmare” that an upgrade will require, he suggested that the Government co-ordinate the 1.2 million streetworks that are carried out each year in the UK so that fibre optic lines can be laid without the country becoming a “nationwide building site”.

Mr Caio also recommended that the Government should relax planning laws to allow broadband to be delivered through overhead cables, rather than underground, raising the prospect of poles carrying broadband to remote areas that is likely to upset environmental groups, or to consider opening national infrastructure, such as sewers, to lay the cables.

High-speed broadband, which the Government estimates will be 25 times faster than current speeds, will allow consumers to download songs and films within seconds.

Mr Caio’s recommendations, which the Government welcomed, come ahead of the publication of the regulator Ofcom's initial thoughts on next generation broadband networks, due to be published later this month.

“The case for a public intervention at this time is weak at best,” Mr Caio said. “There is little evidence in the short term the UK is going to suffer from the lack of an extensive next generation access network.”

Mr Caio pointed out companies have started to invest in next generation access, which he said proves that competition, not government intervention, is the best approach.

Virgin Media has built a fibre network and will launch its improved internet offering, with speeds of up to 50 megabytes per second, by Christmas, rolling it out to 12 million households by 2012.

According to Virgin Media, its network will allow users to download a song in a second, an album in ten seconds and a TV show in one minute.

In addition, BT said in July it would invest £1.5 billion to bring superfast broadband to 10 million homes.

Mr Caio, who said his role was to raise issues and provoke debate, rather than come up with answers, said next generation access was likely to be a patchwork of fibre optic cables and wireless technologies.

He said technology is changing so fast that the Government should keep an open mind on what technology is used.

"My recommendation to the Government is don't commit to anything today because the technology is changing," he said. "You might find yourself having committed a lot for something that could have been done by the market".

Other recommendations included increased transparency on how service providers manage internet traffic, particularly at peak times, revealing the true bandwidth that is provided.

BT and Virgin Media welcomed the report. A BT spokesman said the group “agrees with the broad conclusion that the market, rather than the state, should be the catalyst for fibre roll out.”

John Hutton, the Business Secretary, said: “This technology will touch almost every part of the economy.

“We will consider his recommendations as we plan to make sure the UK remains one of the world’s leading Internet economies.”

Mr Caio's report coincided with a survey by Cisco Systems, the US technology group,which concluded that the quality of Britain’s broadband lags behind that of 23 countries, including Latvia, Lithuania, Bulgaria and Hungary.

Sweden and the Netherlands have the best performing broadband connections in Europe, thanks to big investment in upgrading the network to fibre optic and cable broadband, according to the report.

The study found that the UK fell just below adequate levels of broadband connectivity needed for a satisfactory experience and gave warning that Britain risks falling behind the rest of the world economically and socially as a result of poor speeds.

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