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Ofcom has hit back at criticism of its decision to cut wholesale broadband prices in rural areas.

The communications regulator announced last week that it had instructed BT Wholesale to significantly reduce the prices it charges rival broadband providers to use its network infrastructure in less densely populated areas.

Ofcom said the price reduction will be 12 per cent below inflation and will apply to services provided using BT's wholesale network.

Welsh broadband provider Wispa Ltd hit out at the decision, saying it would ultimately lead to BT scaling back on its infrastructure investment.

"Ofcom are either clueless, witless or toothless – it's difficult to make my mind up which it is," said Wispa Ltd Chief Operating Officer Richard Brown.

In a letter to the Guardian this weekend, Ofcom's Director for Wales, Rhodri Williams, responded by saying its decision to cut wholesale prices will in fact encourage "efficient investment" in new broadband technology and will benefit around three million homes and businesses.

"Ofcom has cut wholesale prices only for the current technology which provides "up to" 8Mb services and not for "up to" 24Mb services or super-fast, fibre-based broadband," Mr Williams wrote.

"This will incentivise BT Wholesale to invest in this new technology where it is efficient to do so, while encouraging competition in areas where BT is the only provider."

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