Ofcom is to force BT to drop the price it charges ISPs to use its network to offer broadband in rural areas, in a bid to improve services in these areas.
The regulator hopes that by forcing the telecommunications company to reduce the amount it charges by 11 percent below inflation, around three million homes and businesses in rural parts of Scotland, Wales and Northern Ireland as well as the South West of England, Norfolk, Yorkshire, Cumbria and Northumberland, will benefit consumers by offering cheaper and faster broadband.
The regulator said it expects the reduction in costs to "generate more competition between retail ISPs and to lead to cheaper retail prices which will benefit consumers".
Furthermore, Ofcom hopes the changes will also lead to better quality and faster services as they will enable ISPs to allocate more bandwidth per customer without increasing its costs.
However, ADSL 2+ technology that enables speeds of 'up to' 24Mbps over existing copper networks has been excluded from the forced charge reduction as Ofcom hopes this will encourage BT to roll it out in rural areas.
The change in charges will come into affect in mid-August this year and will run until March 2014.
Chris Marling from Broadband Genie, said: "This should be fantastic news for rural broadband customers who have been ignored by both BT and Virgin Media, as well as rival operators, as they are not seen as profitable enough".
"In many instances rural customers are charged more for an 'up to' 8Mb service - that is often slower than 2Mb in reality - than people in urban areas are charged for an 'up to' 20Mb deal that will yield average results of 12Mb or higher."
Comments
Malc Tulloch said: What annoys me is you sign up for either a 12 or 18 month contract for a given price then a week later they are offering it on TV for a lower price to new customers how about looking after their bread amp butter customersIts things like that that make you want to shop aroundWe live in a small village in Wales amp are fortunate enough to be a few hundred yards from a main road our speed is around 4 to 6 MB which Im very pleased with
Dickymint said: I live in a rural area my broadband speed is a heady 05mb for that reason I set up a wireless broadband community this now gives up to 6mb at its fastest We rely on another village to supply our connection but no matter how hard we try none of the big hitters are in the least bit interested in giving us a decent phone line let alone a broadband connection
wispa Limited said: Ofcom Rural Broadband announcementproves Ofcom are toothless or cluelessaccording to Wispa LimitedWispa Limited COO reacts vehemently to todays claims by Ofcom that a 12 reduction in wholesalepricing forced on BT for Market 1 exchange areas will reduce rural broadband costsTodays announcement by Ofcom claims to be bringing cost reductions to millions of ruralbroadband users across the UK Richard Brown COO at Wispa Limited is absolutely clearthat this demonstrates thatOfcom are either clueless witless or toothless - its difficult to make my mind up as to whichit isAccording to the Press Release issued by OfcomOfcom expects the reduction to incentivise ISPs to invest in and launch their own networksin more rural areas and help them compete with BT Wholesale And given that ADSL 2 willbe exempt from the charge controls its thought that this should encourage BT Wholesale toinvest in this new technology and upgrade its own services tooThis is so far away from the truth as to make a total mockery of Ofcoms efforts1 A reduction in the wholesale pricing of 10-12 has just given BT less reason to invest inrural communities due to constantly diminishing returns on investresult rural broadband is worse off today than yesterday2 A reduction in wholesale bandwidth costs of around 10 is not a reduction in cost toresellers and agents of 10 as wholesale bandwidth makes up a very small proportion ofthe cost to deliver rural broadbandresult rural broadband is no better off today than yesterday3 Ofcoms claim that rural broadband will be cheaper for millions of rural customers willactually increase the discontent within the subscriber base when it doesnt happenresult companies find it harder to maintain customer satisfaction and rural broadband isworse off today than yesterdayOfcom seem to be going out of their way to prove that they are not fit for purposeexplained Brown this announcement couched in the way that it has been justdemonstrates the total lack of understanding that this body has of a market it is supposed tobe the independent governing body forOfcom it would appear have no real understanding of how to generate competition in themarket place and indeed todays announcement has only served to damage the hopes andaspirations of rural providers and subscribers across the UKBravo Ofcom
David said: We that live in the rural areas need to get away from copper If we dont we will be going through the same upgrade issues again in a few years time