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Ofcom cuts rural broadband prices

July 21, 2011 By: Dr Search Principal Consultant at the Search Clinic Category: Customer Service, internet, Technology Companies, Uncategorized

Rural broadband bills could fall after telecoms regulator Ofcom moved to cut the wholesale price that BT charges other internet providers.
Ofcom cuts rural broadband pricesThe company is the only operator in many smaller telephone exchanges and ISPs have to factor ‘renting’ BT’s equipment into their price plans.

That means customers often miss out on cheaper deals available in towns and cities.

The reduction only affects broadband services of up to 8Mbps.

From mid August until March 2014, Ofcom has ruled that BT must cut its rates by 12% below inflation per year.

Rural campaigners welcomed the news.

The Countryside Alliance said it was “delighted” by the decision.

Many ISPs, other than BT, are able to offer consumers cheap broadband through a system known as local loop unbundling (LLU), where they place their own equipment in the exchange.

In less populated areas, where this may be uneconomical, they have to effectively ‘rent’ the system for delivering their service from BT

BT Wholesale’s costs are passed on, typically adding around £10 to customers’ broadband bills, according to the website BroadBandChoices.co.uk.

BT said the impact of the cost reductions on its revenues would be in the “low millions”.

The prices BT Retail charges consumers will remain the same.

Ofcom has not applied the reduced charges to ADSL2+, a next-generation copper-wire technology which offers speeds of up to 24Mbps.

It said it hopes that this will encourage BT Wholesale to invest more in this.

The government is keen to see next-generation services thrive in rural as well as urban areas as it aims to make the UK the fastest broadband nation in Europe by 2015.

Critics have argued that relying on copper technologies will not future-proof networks and have urged operators to invest in fibre optics which can provide much faster services.

Whether consumers will benefit from the price cuts is not yet clear.

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