Countryside set for cheaper internet access
Wednesday 20 July 2011
Millions of people are set to get cheaper internet access after BT was told today to slash its wholesale charges to rural areas.
Ofcom, the UK telecoms regulator, has instructed BT to cut annual prices by 12% below inflation for the next three years for firms that use its network to supply remote rural locations.
Up to three million homes and businesses will benefit from the reduction, Ofcom said, especially those located in the hard-to-access parts of Scotland, Wales and Northern Ireland, the South West, Yorkshire, Northumberland and Cumbria.
The reduction does not include connection, which reduces the effective price cut to about 11%, Ofcom said.
Higher costs of delivery mean customers in remote areas pay more than those in the cities and towns, but the regulator wants the price cut to encourage both internet providers and BT to invest more in upgrading their systems.
This should result in lower prices and also faster access speeds for country areas, Ofcom added, while also encouraging more providers to install their own networks to compete with BT's wholesale business.
The regulator says 78% of broadband customers are in densely-populated and urban areas, which have effective competition and get a good service, but deals are still limited for the population outside of these areas.
BT said nearly two-thirds of its 5,500 telecoms exchanges serve the remote area market, but they account for only 12% of customers.
It added Ofcom's decision would have a "non-material" impact on BT Wholesale while retail arm BT Retail does not charge any more for supplying broadband in remote areas.
"Unlike many other providers, despite the higher costs involved, BT Retail's consumer broadband products have always been priced the same in rural areas as in urban areas. This ruling is therefore of more relevance to those ISPs who currently charge a supplement in rural areas," it added.
Ofcom flagged its intention to impose the price cuts in January when it indicated the reductions would be in a range of 10.75% to 14.75% below inflation.
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