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The British populous is being divided by the cost of broadband depending on where they live, with households in rural areas paying up to £100 more than their city dwelling counter parts.

This news comes as Tiscali offers customers living near one of their upgraded exchanges a hefty discount – a free telephone line worth more than £120 a year. In the meantime, those customers living ‘in the sticks’ will have to continue paying higher prices.

These changes have come about as big broadband companies are now able to put their own equipment into local exchanges.  But due to the high cost of installing such equipment, only affluent areas have switched. Broadband providers such as Sky, AOL and Tiscali have been ‘unbundling’ BT’s exchanges in order to escape BT wholesale’s charges. As such they are able to charge a customer living near the unbundled exchanges less, which constitutes the two-tier price system for customers.

Steve Weller of uSwitch, says that the average price last year for broadband dropped by 5% in urban areas, but increased by 4% for those outside the cities. "It's disheartening to see Tiscali imposing additional charges on customers that fall outside their unbundled network. AOL announced similar charges last week and we have a growing concern about this becoming standard practice in the broadband industry," he says.

"It's simply not acceptable that one customer has to pay more for an identical service just because their postcode happens to fall outside their provider's unbundled area hit list. The eight million households near exchanges that are yet to be unbundled are the real victims here as they could find that they are unable to obtain the glitzy deals being advertised."

Weller observes that Pipex and Orange have yet to give in to this new wave of pricing and states "it's a real opportunity for them to become the broadband heroes for customers living in rural areas."

Tiscali adamantly denies introducing a two tier system. “We are reducing our prices - what's bad about that? We plan to have 800 exchanges unbundled by the end of next month - we are writing to customers to let them know when they will be offered the new pricing structure. The others will continue to pay the price they signed up to," claimed a Tiscali spokes woman.

BT however continues to charge the same to everyone regardless of location

Are these charges fair or unfair, let us know, leave your comments below.

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