Ofcom forces BT to cut cost of rural broadband
In a move sure to delight broadband's have-nots, not to mention BT's rivals, Ofcom has announced it will make BT lower its prices for rural broadband every year for the next three years. The first price cut is set to be enforced next month.
The price cuts will effect around 20 per cent of broadband customers in the UK: those who are in the wholesale broadband access market group defined by Ofcom as "market 1", where BT is the only provider of wholesale broadband services in the exchange.
In a January report Ofcom described these areas as having "limited prospect in the near term of any wholesale competition" as prices were simply too high for the kind of returns available, putting competitors off.
Ofcom will now force BT to cut its prices by 12 per cent below inflation each year for the next three years, in the hope this will encourage competition and therefore improve services to customers in these areas, which are mostly rural.
A BT spokesperson said: "This outcome is in line with the proposals that were widely reported on earlier this year. The impact on BT Wholesale will be non-material.
"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."
Commenting on the move, Broadband Genie editor Chris Marling said: "This should be fantastic news for rural broadband customers who have been largely ignored by BT and completely overlooked by Virgin Media and other rival operators, as they are not seen as profitable enough.
"In many instances rural customers are charged more for an 'up to' 8Mb service - that is often slower than 2Mb in reality - than people in urban areas are charged for an 'up to' 20Mb deal that will yield average results of 12Mb or higher.
"We hope this is enough of a carrot for BT's rivals to bite at, although that will remain to be seen."