Ofcom forces BT to drop rural broadband prices

Ofcom, the UK's communications regulator, has announced that it will be forcing BT to drop the price of its wholesale broadband offerings in rural areas where the lack of competition keeps prices artificially high.

Announced today, Ofcom's plan comes after the outfit lifted wholesale regulation in large areas of the country where it had concluded that broadband competition was working well for the consumer in helping to driving down prices. Sadly, while Ofcom's figures suggest that around 78 per cent of UK households abide in areas of healthy competition, many rural areas remain locked in a virtual monopoly.

As a result, broadband subscribers in rural regions where BT Wholesale is the only option typically pay more for slower speeds than in areas where local-loop unbundling - a practice usually only seen in dense urban environments - has taken place.

To help those in rural areas out, Ofcom will be forcing BT to drop its wholesale broadband pricing at a rate some 11 per cent below inflation per year. This, the regulator claims, will encourage competition between retail ISPs and lead to cheaper retail prices for around three million homes and businesses in rural areas of Scotland, Wales, Northern Ireland, and the south west of England, Norfolk, Yorkshire, Cumbria, and Northumberland.

The price control will also, Ofcom hopes, encourage other ISPs to roll out their own networks in these areas in order to compete with BT Wholesale, and potentially for ISPs to offer faster connections to rural customers by using some of the savings to allocate more bandwidth to each user.

Ofcom is also hoping to boost speeds by exempting ADSL2+ technology from the charge control scheme, encouraging BT Wholesale to roll the technology - which boosts the maximum possible speed on an ADSL line from 8Mb/s to 24Mb/s - out to rural areas in order to increase its penetration. The charge control, the group explains, will only affect BT Wholesale's IPStream Connect Max and Max Premium products.

"Ofcom’s charge controls could narrow the difference between prices that consumers in rural and urban areas are paying for broadband services," a spokesperson claimed in an official statement. "This difference is mainly due to the more limited set of offers available which is a result of the higher costs of delivering broadband to customers in rural areas."

The scheme is due to come into effect from August, and will run until March 2014.