Ofcom Demand Rural Broadband Pricing Should Be Cut

The digital divide between town and country looks to be shrinking, as Ofcom rule that BT have to cut wholesale pricing.

Currently, BT is the only operator with equipment in many of the smaller telephone exchanges, meaning that other ISP’s have to factor ‘renting costs’ into their pricing plans.  The result is that customers often miss out on cheaper deals available in towns and cities.

In cities, many ISPs, other than BT, are able to offer consumers cheap broadband through a system known as local loop unbundling (LLU), where they place their own equipment in the exchange.  This is deemed ‘less economical’ in many rural areas, resulting in pricing being affected by the renting costs. 

As competition rises, this could be great news then for rural customers; however, the telecoms regulator has not applied the reduced charges ruling to ADSL2+, a next-generation copper-wire technology which offers speeds of up to 24Mbps.  The hope is that BT focus on investing in the new technology. 

The pricing changes should begin from mid August, and under the ruling BT must cut its rates by 12% below inflation per year until March 2014.

In the meantime, Fujitsu is bidding for government money to create a fibre network for rural areas. Both Virgin Media and TalkTalk have said they will offer services on it if the bid is successful.

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