Highlands and Islands Enterprise (HIE) has signed a landmark deal with BT to bring fibre broadband to remote areas of northern Scotland.

This has been described as “the UK’s most complex and challenging broadband project ever,” due to the geography and disparate population of the Highlands and Islands. Estimates have indicated that, without public sector support, fewer than one in four properties would have fibre broadband via commercial rollout.

However, it is believed that the £146 million investment – a combination of public and private sector money – will bring fibre broadband to 84 percent of Highlands and Islands homes and businesses by the end of 2016.

“Digital connectivity is essential to today’s social and business activity. High-speed fibre broadband in the Highlands and Islands will make a real contribution to our communities’ prosperity, particularly for people in remote and rural areas,” said Alex Paterson, Chief Executive of HIE.

“It offers opportunities for new ways of working, innovation, enhanced public services, access to international markets and provides the infrastructure needed by business sectors like energy, life sciences, tourism and business services.”

As part of the project, BT will build a fibre backbone with more than 800km of new fibre on land and install hundreds more kilometres of fibre access cable to hundreds of new street cabinets. Engineers will also lay around 400km of subsea cables over 19 crossings to remote islands.

The public sector investment towards the contract is £126.4 million, which will be delivered through the Scottish Government broadband fund and incorporate funding from Broadband Delivery UK (BDUK).

A further £12 million come from from HIE’s own budget, and BT is investing an additional £19.4 million in the project, taking the total project value to around £146 million.

“There are incredible obstacles to overcome, not least building a fibre network across some of the most rugged terrain in the UK. And we have huge distances to cover as we lay our cables over the hills and glens and under the sea,” said Bill Murphy, BT Group’s Managing Director of Next Generation Broadband.

“The unprecedented scale of this project is such that it can only be done in partnership and all of us in BT are looking forward to continuing the great working relationship that we’ve built up over many years with Highlands and Islands Enterprise.”

BT expects to deploy widespread fibre to the cabinet, which offers broadband speeds of up to 80Mbps, and some Fibre to the Premises. Ethernet, which can offer cost and speed benefits for medium-sized businesses, will also become much more widely available as a result of the fibre build.

During the life of the project, BT and HIE will assess new and emerging technology options through a £2.5 million Innovation Fund, with a view to extending faster broadband to the most remote places in the Highlands and Islands.

“We congratulate Highlands and Islands Enterprise, BDUK and BT on the work that they have done to agree this contract and The Scottish Government will continue to work in partnership with them and local authorities across the region, to deliver real benefits to local people and businesses,” said Deputy First Minister Nicola Sturgeon.