BT's local network business Openreach will carry out the work with a use of technologies known as fibre to the cabinet (FTTC) and fibre to the premises (FTTP).
These provide fast download and upload speeds which allow a music album to be downloaded in less than 30 seconds and a feature-length HD movie in less than 10 minutes, whilst high-resolution photos can be posted online in seconds.
The current UK average speed reported by regulator Ofcom is 9Mbps (megabits per second) while FTTC can download as fast as 80Mbps and upload 20Mbps. Faster still is FTTP with download speeds reaching 330Mbps from Openreach.
Cabinet Secretary for Infrastructure, Investment and Cities, Nicola Sturgeon, said: "I very much welcome this latest announcement from BT. It is essential that households and businesses everywhere in Scotland have access to high-speed connectivity and fibre broadband will play a key role in enhancing our digital offering.
"The Scottish Government is committed to ensuring that a world class digital infrastructure is in place across Scotland by 2020 and that a significant increase in coverage has been achieved by 2015. This investment, along with significant investment by the public sector, will ensure that this ambition is achieved."