Hopes rise for rural broadband after BT told to reduce charges

Communications regulator Ofcom said it had proposed cutting the prices BT can charge in parts of the country where it is the sole provider of wholesale broadband services, which is mainly in rural areas.

The proposed price reductions are between 10.75% and 14.75% below inflation, which Ofcom said could increase competition between retail Internet Service Providers (ISPs).

The changes could also lead to a better quality service by enabling ISPs to allocate more bandwidth per customer to deliver faster broadband, Ofcom said.

Nearly 12% of UK households, or around three million homes and businesses, could benefit from the proposals, the regulator added.

They are mostly in rural areas including parts of Scotland, Wales and Northern Ireland, as well as the south west of England, Norfolk, Yorkshire, Cumbria and Northumberland.

Ofcom said it expected to publish a statement on the new controls in the summer and planned to introduce them shortly afterwards.

BT said it was crucial for the proposals to strike a balance between control and incentives to invest in rural areas.

A spokesman said: "BT understands Ofcom's desire to move from voluntary to more formal wholesale broadband pricing controls in the most rural parts of the country given this defined market is getting smaller as deregulation expands elsewhere.

"It is key that the details strike the right balance between control and incentives to invest in rural areas. As the UK's main investor in rural broadband, we will engage fully in the consultation process which follows to make our case."

Consumer Focus spokesman Adam Scorer said: "Broadband customers in rural areas where BT is the only provider will be pleased to be able to access cheaper broadband. This is a very welcome move by Ofcom.

"However, in some remote areas people are still waiting for broadband to reach them and many more don't have access to the faster broadband services they need to take full advantage of being online.

"The Government plans for everywhere in the UK to have faster broadband by 2015. The emphasis needs to be on the market to deliver this.

"However, where there are fewer customers and profits are lower, this may not happen. People in these more remote areas need to be assured by the Government that alternative plans are in place and that the money earmarked to tackle this issue will be enough."