A Conservative government would allow rivals to connect their own fibre to BT exchanges as part of a plan to spread the rollout of faster broadband to rural areas.

The shadow chancellor George Osborne said the Tories would end BT Openreach's local loop monopoly in an interview on the Andrew Marr Show on Sunday.

It would mean other ISPs such as Sky or Carphone Warehouse could lay fibre where BT's own rollout, currently scheduled to cover 40 per cent of the national network by mid-2012, does not reach.

BT has said the economics of upgrading its network make it too expensive to connect the most sparsely populated final third of the country. It has lobbied for subsidies, which the government has heeded with a forthcoming 50p per month tax on every landline, raising about £175m annually.

The Conservatives oppose the tax and claim market forces could deliver wider rollout if BT Openreach's monopoly was revoked.

If that didn't work, Osborne said, underspend from the digital TV switchover would be diverted from the licence fee.

"If there are some parts of the country where the market can't get to - because I think the best way to deliver this is by breaking up the BT monopoly at the moment which holds back companies like Carphone Warehouse or Virgin) - if we find the market can't do that, then use the BBC licence fee, the digital switchover money in the BBC licence fee, to get broadband out to the rest of the country, he said.

The government has earmarked the digital switchover surplus to help the communications industry deliver a 2Mbit/s universal service commitment to 100 per cent of premises.

Osborne yesterday set a target of "most" homes receiving "superfast broadband" by 2017. He said his "superfast" means 100Mbit/s. Three quarters of the upgrade BT has committed to are to be fibre-to-the-cabinet installations, capable of a theoretical maximum of only 40Mbit/s. The other 25 per cent will be fibre-to-the-premises and comply with the Tory definition.

However Virgin Media's cable network is currently capable of up to 50Mbit/s and covers about 50 per cent of premises. Tests are ongoing at 200Mbit/s, so it seems likely that between BT and Virgin Media the Conservative target would be met without any government intervention.

As part of its Digital Britain strategy, the current government pledged last year that 90 per cent will be connected to "superfast" services by 2017. It didn't define "superfast" however.