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Faster, cheaper broadband coming to rural areas this summer?

Ofcom proposes price controls on BT Wholesale in areas lacking competition...
Written by Natasha Lomas, Contributor

Ofcom proposes price controls on BT Wholesale in areas lacking competition...

Faster and cheaper broadband could be heading to rural parts of the UK this summer under proposals announced by telecoms regulator Ofcom.

Ofcom is proposing to reduce the prices BT Wholesale can charge ISPs in areas where it is the sole provider of wholesale services - mainly rural parts of the country. The level of price reductions being mooted is between 10.75 per cent and 14.75 per cent below inflation. Ofcom expects this will lead to increased competition between retail ISPs and reductions in consumer broadband prices.

The regulator said it may also lead to faster broadband services in rural areas, as ISPs could allocate more bandwidth per customer. Ofcom is also proposing to exempt ADSL2+ from the charge controls in a bid to encourage BT Wholesale to invest in the faster broadband technology, where it is cost-effective to do so. ADSL2+ can support download speeds up to 24Mbps over copper.

Ofcom said the proposed price cut could benefit nearly 12 per cent of UK households or about three million homes and businesses - mostly in rural areas, including parts of Northern Ireland, Scotland and Wales; as well as Cumbria, Norfolk, Northumberland, South West England and Yorkshire.

Ofcom map of UK broadband wholesale competition

Map of levels of wholesale broadband competition across the UK
(Image credit: Ofcom)

In other parts of the country where local loop unbundling (LLU) has led to some wholesale broadband competition, Ofcom is not proposing charge controls but is putting "cost-oriented obligations" on BT Wholesale - meaning the broadband product it sells has to reflect the cost of providing it. An Ofcom spokeswoman said this change might lead to a slight reduction in broadband prices in those regions.

The price-reduction proposal follows a review of broadband charges carried out by Ofcom last month in which the regulator concluded charge controls were needed in about one-fifth of the UK, in areas not served by effective wholesale competition, but could be removed from areas where competition is working.

Ofcom said it will publish a statement on the price-cut proposal this summer, with the price cuts coming into effect shortly after.

In recent weeks, rural broadband got a boost after Ofcom rubber-stamped the refarming of 2G spectrum for 3G mobile broadband services. Reuse of 2G spectrum for mobile broadband had been held up by years of deliberation and legal wrangling between the regulator and various mobile operators.

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