Ofcom wants BT Wholesale to slash broadband prices in rural areas

Broadband prices in some rural areas could be slashed and bandwidth increased under new Ofcom proposals.

The communications regulator wants BT Wholesale to reduce the prices it charges internet service providers (ISPs) by up to 14.75 per cent for lines in areas where it is the sole provider of wholesale broadband services.

Ofcom said that by doing this, ISPs could either or cut prices to customers or improve services by buying more capacity for their customers without increasing their costs.

This could result in faster broadband for rural areas such as those in parts of Scotland, Wales and Northern Ireland, South West of England, Norfolk, Yorkshire, Cumbria and Northumberland.

However, although the move has been broadly welcomed, the Country Land and Business Association (CLA) said the plans ignored the real problem for many people in rural areas.

Charles Trotman of the CLA told Computeractive. "I am more than pleased about this but it misses the point of broadband supply in rural areas.

"A significant number of places can't get any broadband at all because no-one is setting it up. There needs to be more effort by Ofcom and Government to ensure everyone will be able to get broadband."

The price reductions proposed by Ofcom are between 10.75 per cent and 14.75 per cent below inflation. It would only apply to areas where there is no local loop unbundling (LLU).

LLU is where an ISP puts its own equipment in BT exchanges and delivers services over its own networks rather than BT's. This allows these ISPs to tailor their services to customers and offer speed boosts and upgrades.

Ofcom estimates around three million households will be helped if the proposals are adopted.

Ofcom also proposes to exempt ADSL 2+ technology, which is capable of supporting faster broadband speeds of up to 24Mbits/sec, from charge controls. It said this should encourage BT Wholesale to invest in this new technology where it is cost effective to do so.

The regulator said it would issue a statement in the summer and any changes would come into effect shortly after this