Rural customers ripped off for broadband

Robert Powell looks at how broadband costs could be about to drop in countryside areas...

Look out of your window. Do you see sprawling countryside, drooping trees and not a single tower block or factory? If you do, then there’s a high chance that you’re overpaying for your broadband.

Why? Well, because you probably live in the countryside.

But don’t panic, as with a bit of luck – this rural rip-off won’t last for long...

Lack of competition

The problem was identified by the communications regulator Ofcom and blamed on the lack of competition within rural broadband markets.

Rural areas only have a limited number of telephone exchanges. And these exchanges are more often than not owned by BT, meaning that anytime a smaller internet service provider (ISP) wishes to extend their coverage to a rural area; they have to ‘rent’ out equipment from BT Wholesale.

This cost is then passed onto the customer and adds around £10 to a single broadband bill, according to broadbandchoices.co.uk. As a result, countryside customers miss out on the cheaper broadband deals offered to their urban counterparts.

Moreover, BT is able to snap up a majority of countryside broadband customers as it offers the same tariffs in both rural and urban areas.

It is this effective monopoly that is restricting competition and keeping rural broadband prices high.

Falling rates

In response to these lofty prices, Ofcom has decided to force BT Wholesale to slash the fees it charges other internet providers in rural areas. The ruling will cut BT wholesale rates by 12% below inflation each year and will last from the middle of this month until March 2014.

The decision is intended to stimulate competition amongst ISPs in sparsely populated areas and drive prices down.

The areas set to benefit from the change include large areas of Northern and Mid Wales, Northern Ireland and Scotland as well as Yorkshire, Cumbria, Norfolk and South-West England. The regulator estimates that around three million households will be better off as a result of their decision.

To find out if you will be affected by the changes, take a look at this Ofcom map showing where the cuts will apply.

Improving speeds

The reduction will only apply to broadband services up to 8Mbps; however Ofcom has said that the change should push up rural broadband speeds overall.

The regulator is hoping that as wholesale costs are reduced, ISPs should be able to invest in more equipment and speed up the service they offer to rural customers – without increasing their rates.

Ofcom has also exempted ASDL 2+ – a type of technology that turns ordinary copper phone wires into high speed digital lines – from the charge controls. This should allow BT Wholesale to invest in this technology within rural phone exchanges and thus boost the overall speed of countryside broadband.

Cut the cost of your broadband

Despite these wholesale cost cuts, many are still sceptical as to whether the price reductions will really materialise in households across the UK.

So with that in mind, here are a few other ways to cut the cost of your broadband connection:

Shop around and switch: Keeping up to date with current broadband prices is always a good idea, especially when rates are changing so frequently. You can get a free quote quickly and easily by heading to broadbandchoices.co.uk – an Ofcom accredited broadband comparison site.

Take advantage of free periods: As we reported in Pay nothing for your broadband, many suppliers now offer several months of free internet access as part of their packages. Of course, you should always look into the charges applicable after this initial period ends, as well as how long you’ll have to lock into the supplier for.

Bundle up: If you currently use one provider for your TV or phone and another for your broadband you could save a bundle by switching all of your services to one supplier. A sly way to save even more is to phone up you provider and threaten to leave if they don’t offer you a good bundled rate. As with so much competition in the market, they’ll be keen to keep your business.

Be realistic: If you only ever head online twice a week to check the Lotto results, you probably won’t need a super-fast connection. Be realistic and don’t pay for what you don’t need! That goes for digital TV packages and phone lines as well.

Head online: Always sign up for broadband online as this will often grant you discounts that are not available through other channels.

The UK’s worst provider for customer service

And finally, to find out which broadband supplier you really should avoid if you’re after top customer service read The UK’s worst broadband provider.

Are you a ripped off rural customer

Do you live in the countryside and pay over-the-odds for your broadband connection?

Let us know using the comment box below.

More: Fight back against rising broadband costs | The most unhappy broadband customers