Under the Executive's Broadband for Scotland's Rural and Remote Areas initiative, BT will enable 378 exchanges to deliver basic broadband to 51,000 households and 5,400 businesses across Scotland that would not have otherwise received the service.
Twenty local authority areas from the Shetland Islands to the Scottish Borders will benefit.
Announcing the contract, enterprise minister Jim Wallace said that the Executive is stepping in to help provide the 'vital technology' in areas like this where the commercial market won't deliver.
'We made a commitment in our Partnership Agreement to ensure that every community in Scotland has access to broadband by the end of 2005. We are now well on the way to delivering on this.
'We cannot allow remote and rural communities to fall behind simply because they cannot access this vital technology that can make a positive difference to many aspects of our lives.
'We have made it clear again and again that economic growth is our top priority. By providing access to broadband technology in Scotland and the huge benefits it brings, we are putting in place an important business and educational tool to facilitate economic growth in every community.'
Bob Downes, the director of BT Scotland, said:
'Delivering broadband to all of Scotland has been at the heart of BT Scotland strategy in recent years.
'Having invested in the region of£100m to bring broadband to 97.8 per cent of the country by this summer, we welcome this opportunity to complete the framework. This will also be welcome news for our workforce of almost 12,000.
'We look forward to working with the Scottish Executive to overcome Scotland's unique geographical challenges and use technology to place Scotland at the technological, if not physical, epicentre of Europe.
'Ubiquitous broadband availability brings great opportunities for Scotland in education, public services and business life, and will place Scotland among the leaders of the G8 countries in terms of availability. BT Scotland is delighted to have been entrusted with a lead role in securing the country's economic future.'
Engineering work to deliver the roll out of broadband services across Scotland's rural and remote communities will begin this week, with broadband services being available from the first enabled exchanges this summer.
The 20 local authority areas to benefit under the project are:
Argyll and Bute
Dumfries and Galloway
Perth and Kinross
The Broadband for Scotland's Rural and Remote Areas Initiative has been funded as part of the Executive's£24m broadband strategy for Scotland, and has also received financial support of up to£5m from the European Regional Development Fund (ERDF) programme in Scotland.
Broadband for Scotland is run by the Executive in partnership with Highlands and Islands Enterprise and Scottish Enterprise. The Broadband for Scotland's Remote and Rural Areas procurement was led by the Scottish Procurement Directorate at the Executive.
The project was advertised in the Official Journal of the European Union in July 2004 and was, in parallel, notified to the European Commission for State Aid clearance. The project received commission approval as compatible state aid in November 2004. BT was selected as the supplier after the open procurement process and a contract with them has just been signed.