Up to 3m rural homes and businesses could see their broadband costs fall after Ofcom ordered BT to slash its wholesale charges.
Rival internet providers like Talk Talk that use BT’s network to supply remote rural locations will see costs cut by 12% below inflation for the next three years, following a ruling by the UK telecoms regulator today (20 July).Although rural customers are unlikely to see their bills fall by the same amount, Ofcom expects suppliers to pass on the cost savings in a bid to compete for customers.The price cuts will come into effect by mid-August 2011 and will apply in areas where BT has no competition for providing broadband (approximately 12% of the country) including parts of Scotland, Wales and Northern Ireland as well as the south-west of England, Norfolk, Yorkshire, Cumbria and Northumberland.
The new charge controls are designed to narrow the difference between prices that consumers in rural and urban areas are paying for broadband services, but in the longer term it could also be good news for households and businesses who suffer slow and unreliable broadband connections.
Ofcom said it hoped the price cut would “enable internet service providers to allocate more bandwidth to each customer” which could deliver faster broadband services, more in line with those found in towns and cities.
The forced price cut could also encourage ISPs to lay down their own networks in rural areas, and compete with BT Wholesale. “This should ultimately benefit consumers in those areas through lower prices,” said Ofcom.
Click here for a map of the areas where the new wholesale charge controls will apply: