Rural areas set to get cheaper broadband
Rural communities could soon be able to enjoy cheaper and faster broadband, if proposals from Ofcom get the green light.
The communications regulator wants BT to lower the prices it charges to internet service providers in areas where it is the sole supplier of wholesale broadband. It has proposed a reduction of charges between 10.75% and 14.75% below inflation.
The plans would increase competition between retail broadband providers and bring cheaper broadband to an estimated three million homes and businesses. The areas that stand to benefit are typically rural and include parts of Scotland, Wales, Northern Ireland as well as South West England, Norfolk, Yorkshire, Cumbria and Northumberland amongst others.
Following a period of consultation, Ofcom is likely to publish a statement in the summer, after which new price controls would come into force.
Ofcom also hopes that new price controls would also increase the broadband speeds available in rural areas. If costs were reduced ISPs should be able to buy more capacity for their users, without increasing costs, thereby increasing the speeds they are able to offer.
The regulator has also proposed exempting the latest broadband lines from pricing controls (ADSL 2+ which is able to support faster broadband speeds) encouraging BT to invest in better technology where it can.
Consumer Focus welcomed the move. Adam Scorer, director of external affairs 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."
He added: "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."
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An increase in the general level of prices that persists over a period of time. The inflation rate is a measure of the average change over a period, usually 12 months. If inflation is up 4%, this means the price of products and services is 4% higher than a year earlier, requiring we spend and extra 4% to buy the same things we bought 12 months ago and that any savings and investments must generate 4% (after any taxes) to keep pace with inflation. Since 2003, the Bank of England has used the consumer prices index (CPI) as its official measure of inflation (see also retail prices index).