BT today promised millions of customers the chance to receive superfast broadband - running at five to 10 times current speeds - by the time of the London Olympics in 2012.

It said it wants to invest £1.5 billion in new fibre-based broadband giving up to 10 million homes access to top speeds of up to 100 megabits a second. The current average speed is just four megabits.

But the massive investment will come at a price, with BT announcing it will suspend its £2.5 billion share buyback programme from the end of this month, although there is no threat to its dividend payout.

It will also need agreement from the regulator, Ofcom, to change a variety of rules and ensure it can earn a decent return on the £1.5 billion spend.

Chief executive Ian Livingston said: "Broadband has boosted the UK economy and is now an essential part of our customers' lives. We now want to make a step-change which marks a new chapter in Britain's broadband story."

He said existing average four megabit speed in most homes was already stretched by some customers. By getting speeds up to 10 times that - 40 Mb/s - different members of the same household could be watching a high definition movie on demand, playing interactive games on a network and working on complex video presentations with work colleagues at the same time.

Livingston said the superfast broadband would allow "services no one has even thought of yet". He added that it should also end the frustrations experienced by people watching BBC iPlayer or downloading films when they regularly come to a halt while "buffering".

He promised the new services will be offered by BT Wholesale to its rivals such as Sky and TalkTalk and called on local authorities to pitch their case for being included.

He said: "This is a bold step for BT and we need others to be just as bold. We want to work with local and regional bodies to decide where and when we should focus this deployment. Our aim is that urban and rural areas alike should benefit."

Major digging up of roads to put in the new fibre-optic cables will be involved. New developments like Ebbsfleet and the Olympic village will have new fibre running all the way into homes while older areas will have fibre running to local BT exchanges.