UK telecom regulator Ofcom is making BT (NYSE: BT) reduce its wholesale rates to ISPs that deliver broadband services to rural area users.
This latest ruling follows an earlier proposal made by Ofcom for BT to reduce wholesale local loop unbundling (LLU) and Wholesale Line Rental (WLR) rates it charges to other competitors such as TalkTalk.
By forcing BT to cut wholesale rates by 11 percent below inflation, it believes about three million homes and businesses in the rural areas of Scotland, Wales and Northern Ireland as well as the South West of England, Norfolk, Yorkshire, Cumbria and Northumberland, will be able to get more affordable broadband service.
Set to go into effect by mid-August, Ofcom believes the lower rates will "generate more competition between retail ISPs and to lead to cheaper retail prices which will benefit consumers."
In addition to lower prices, Ofcom believes the new pricing structure will help ISPs provide better quality and higher broadband speeds because they'll be able to dedicate more bandwidth to each customer without having to pay more to purchase wholesale circuits from BT.
BT's copper-based up to 24 Mbps ADSL2+ service, however, is not included in the new pricing scheme because Ofcom thinks that it will drive the incumbent provider to bring the service to more of the country's rural markets.
- PC Advisor has this article
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