Consumers and businesses living in rural areas could be set to benefit from cheaper broadband deals, it has been suggested.
Media regulator Ofcom has instructed BT Wholesale to significantly reduce the prices it charges rival broadband providers to use its network infrastructure in less densely populated areas.
The price reduction will be 12 per cent below inflation per year and will apply to services provided using BT's wholesale broadband network – such as high-speed broadband deals.
Ofcom expects these price cuts to generate more competition between retail broadband providers, which could see end users receive greater value for money.
The changes could also lead to better quality services, as broadband providers may be able to allocate more bandwidth per customer.
They may also be incentivised to roll out their own networks across certain areas of the countryside – enabling them to compete with BT Wholesale rather than simply install their own equipment at BT exchanges.
Ofcom believes around three million homes and businesses across the UK countryside could be set to benefit from lower wholesale prices, including parts of Scotland, Wales and Northern Ireland.
Cheaper broadband services may also become available in the south-west of England, Norfolk, Yorkshire, Cumbria and Northumberland among other largely rural areas.
"The charge controls could narrow the difference between prices that consumers in rural and urban areas are paying for broadband services," Ofcom stated.
"This difference is mainly due to the more limited set of offers available which is a result of the higher costs of delivering broadband to customers in rural areas."
Ernest Doku, of uSwitch.com, said the move "could wipe out the postcode lottery" that has seen rural householders treated as second class broadband citizens in the UK.
"It has the potential to ultimately cut the costs of the bills of those living in rural areas. By increasing competition, Ofcom is making sure that consumers will end up the real winners as they will now have a greater choice of providers," he stated.
"This means the broadband providers can look to offer the best deals possible to win new customers over and, now that they can access BT’s infrastructure at a lower cost, it could only be a matter of time until they pass these savings on."
Mr Doku said this is "a great opportunity" for broadband providers to step up and make things better for their customers.
"Even if they don’t pass these savings on, customers could still benefit as the broadband providers may decide to invest in bringing a faster broadband service to rural areas, which have traditionally been stuck in the slow lane. However, this remains to be seen – for now the ball is firmly in the court of other providers," he added.
Ofcom has exempted ADSL 2+ technology from charge controls, in a bid to encourage BT Wholesale to invest in this new technology where it is cost effective to do so.
ADSL 2+ is capable of supporting faster broadband speeds than ADSL, with a maximum possible speed of 24Mb over the copper network.
The new charge controls are to come into force by mid-August 2011.