Rural UK set for cheaper broadband as Ofcom forces BT to cut charges

Communications regulator says BT must charge other ISPs less for using its networks Up to 3m homes and businesses in rural parts of the UK could receive better value broadband services by the end of the year, following an Ofcom decision to force BT Wholesale to reduce the amount it charges other internet service providers (ISPs) to use its networks. The communications regulator has ruled that BT must reduce its charge to ISPs each year, by a rate of at least 12 percentage points below inflation. For example, if the RPI inflation rate is 5%, BT will have to cut its charges by 7%. The ruling is to take effect by mid-August 2011 and remain in force until 31 March 2014, and paves the way for cheaper broadband prices for millions of consumers and businesses in less densely populated areas across the UK. The rural areas set to benefit from the change include parts of Scotland, Wales and Northern Ireland as well as Norfolk, Yorkshire, Cumbria, Northumberland, the south-west of England and other areas. These are predominantly areas lacking in competition among ISPs. Ofcom said the price change will boost competition and may lead to either cheaper or better quality services – if ISPs do not pass on the savings, they may decide instead to invest in faster broadband services. The regulator hopes its pricing intervention will help narrow the gap between the prices consumers in rural regions pay for broadband services and those in urban areas. Ernest Doku, technology expert at uSwitch.com, said: “This move could wipe out the postcode lottery that has seen rural householders treated as second class broadband citizens. It has the potential to ultimately cut the costs of the bills of those living in rural areas. “By increasing competition, Ofcom is making sure that consumers will end up the real winners as they will now have a greater choice of providers. This means the ISPs can look to offer the best deals possible to win new customers over and, now that they can access BT’s infrastructure at a lower cost, it could only be a matter of time until they pass these savings on.The ball is firmly in the court of other providers.” But Michael Phillips of BroadbandChoices.co.uk was sceptical about whether the 12 percentage point reduction would have a lasting impact. He said: “Ofcom’s recent broadband map of the UK highlighted how huge swathes of the UK countryside are enduring poor connection speeds. If the UK is to be taken seriously as a tech economy, the government needs to dedicate time and resource to bringing the whole of the UK into the online age.” Ofcom has also published a map (PDF) showing where in the UK the charge controls will apply. The regulator said its December 2010 action to lift wholesale regulation in other areas of the country had resulted in 78% of UK households in mainly urban or densely populated areas now seeing effective competition among ISPs. Consumer affairs Household bills Telecommunications industry Broadband Internet Ofcom Television industry Mark King guardian.co.uk

Posted by on July 20, 2011. Filed under News, Politics, World News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.