BT told to cut rural broadband costs

The telecoms watchdog has ordered BT to slash its charges to rivals to help bring cheaper broadband to millions of homes in rural parts of Britain.

Ofcom yesterday revealed it called on BT's wholesale arm to reduce its charges to internet service providers, such as Sky and TalkTalk, using its network to serve customers in the countryside.

The new pricing regime will be capped at 12 per cent below inflation. It will come into effect in the middle of next month and run until March 2014. The move could benefit 3 million homes and businesses in rural areas, the regulator said, including in Scotland and Wales, as well as the South-west of England, Yorkshire and Northumberland.

BT said the impact on its balance sheet would not be material. It added that whether price cuts were passed on to customers would be "totally dependent" on what the internet service providers do. Morten Singleton, an analyst at Investec, said the price cuts were "within the bounds of previous consultation documents and should not come as a surprise". He added that while it was not good news for BT, it was "less negative than it could have been".

Ofcom has been forced to step in as there is no competitor to BT in the many rural areas, while one industry insider said that where there is competition in the countryside, customers can still pay up to £15 a month more.

The regulator put it down to the higher cost of investing in setting up in rural areas and fewer customers. BT, however, said its own retail business has never charged rural customers more than their urban counterparts, unlike many of its rivals.

"This ruling is therefore of more relevance to those ISPs who currently charge a supplement in rural areas," a BT spokesman said.

The telecoms regulator is hoping the price cap will increase competition between the internet providers in less populous areas, and lead to better quality services. It could also lead to faster services as internet providers can buy more capacity for their customers without increasing their current costs.

The news comes shortly after Ofcom published a map of broadband speeds across Britain. Wales and parts of Scotland were saddled with the slowest speeds, as were Cumbria and Rutland.

Ofcom lifted wholesale regulation of the market in areas where competition is "working well for consumers". This has seen 78 per cent of urban and densely populated areas served by competing operators.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Web Developer - PHP

£16500 - £16640 per annum: Recruitment Genius: This fast growing Finance compa...

Ashdown Group: Client Services Manager - Relationship Management - London

£30000 - £32000 per annum + benefits : Ashdown Group: A highly successful, int...

Recruitment Genius: Credit Controller / Customer Service

£18000 - £20000 per annum: Recruitment Genius: This rapidly expanding business...

Guru Careers: In-House / Internal Recruiter

£25 - 28k + Bonus: Guru Careers: An In-house / Internal Recruiter is needed to...

Day In a Page

Woman who was sent to three Nazi death camps describes how she escaped the gas chamber

Auschwitz liberation 70th anniversary

Woman sent to three Nazi death camps describes surviving gas chamber
DSK, Dodo the Pimp, and the Carlton Hotel

The inside track on France's trial of the year

Dominique Strauss-Kahn, Dodo the Pimp, and the Carlton Hotel:
As provocative now as they ever were

Sarah Kane season

Why her plays are as provocative now as when they were written
Murder of Japanese hostage has grim echoes of a killing in Iraq 11 years ago

Murder of Japanese hostage has grim echoes of another killing

Japanese mood was against what was seen as irresponsible trips to a vicious war zone
Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea