East Anglia: Ofcom orders BT to cut rural internet access prices

COMMUNICATIONS giant BT was yesterday ordered by industry regulator Ofcom to slash its wholesale charges to other firms providing internet access in rural areas.

Ofcom said that around three million homes and businesses in remoter areas, including parts of East Anglia, could benefit from the move.

Besides the prospect of greater price competition, Ofcom said broadband speeds could also improve as internet service providers (ISPs) would be able to afford to buy more bandwidth per customer.

The ruling means that BT Wholesale will be required to reduce its prices to ISPs by 12% below inflation for the next three years.

However, the newer ADSL 2+ technology, which can support broadband speeds of up to 24Mbits per second over the existing copper wire network, has been exempted from the price cut in order to encourage BT to roll out higher speeds where it is economically viable to do so.

Ofcom also expects the charge control to incentivise efficient investment by ISPs to roll out their own networks in remoter areas and enable them to compete with BT Wholesale.

The 12% price cut is slightly below the mid point of the range of 10.75% to 14.75% below inflation indicated by Ofcom when it signalled its intention to impose a price cut in January. The regulator added that, as the price control does not apply to connection charges, the effective cut will be around 11%.

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BT said yesterday that Ofcom’s decision would have a “non-material” impact on its BT Wholesale business, and pointed out that its BT Retail arm does not charge extra for providing 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.