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Consumers’ fixed line broadband outgoings could fall to less than £5 per month in just three months time, as broadband providers pass on the benefit of lower wholesale rental charges to their customers.

This week, BT announced that it was dropping bandwidth charges by 50 per cent from January 2010. The company also confirmed that Wholesale Broadband Connect (WBC) rental – that is the rate paid by broadband providers to use BT’s network – is to be dropped to “the lowest current price”.

According to BT, the move will see some customers who live in areas covered by the company’s service upgrade enjoy a reduction of 29 per cent. This is set to occur in places where there is a relative lack of competition among broadband suppliers for residents’ custom due to their low density populations.

Meanwhile, Britons in areas where competition is fiercer, many of whom already pay less for their service, will still benefit from a 14 per cent reduction on average, the company forecasts.

Jessica McArdle, Marketing Manager at Top 10 Broadband, predicted that the change would bring about new levels of competition in the market for lower cost broadband, with hugely beneficial results for customers.

She said: “BT's plans to cut wholesale rental charges could result in almost 30 per cent cheaper broadband in just three months time.

“It's plausible that we could see broadband charges drop below the £5 line for the first time with ISPs like PlusNet and TalkTalk competing for this attractive budget market.”

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